Category Archives: Politics

Buiter Provokes Wrath at Jackson Hole, Says Fed Too Close to Wall Street

Go Willem Buiter! The London School of Economics prof and former Bank of England and European Bank for Reconstruction and Development official has been saying for some time that the Fed suffers from “cognitive regulatory capture” and has been far too responsive to the needs of Wall Street. It’s been puzzling to watch his detailed, […]

Servicers to Ask for Access to Discount Window?

You simply cannot make this stuff up. Reader Steve pointed us to a HousingWire post, which says that mortgage servicers may too come knocking on the Fed’s window for financial support, thanks to the housing bill just passed by Congress. Now we’ve been told by mortgage counsellors involved in the Hope Now Alliance that servicers […]

William Poole Wants Nasty Fannie and Freddie to Go Away

Former regional Fed president William Poole argues forcefully in a New York Times op-ed today that Fannie Mae and Freddie Mac are not only unnecessary but also distort the financial markets and should be wound down. This program would also be consistent with a strategy of minimizing risk and cost to taxpayers. Probably due to […]

S&P May Lower Rating on Fannie, Freddie Subordinated Debt

The possible downgrade of Fannie’s and Freddie’s subordinated debt involves only a small amount of the GSEs’ total debt, but the symbolism is more important than the dollar amounts. It validates some of the critics’ worries about Fannie and Freddie but also signals the possibility that not only shareowners could be wiped out, but even […]

Stiglitz; "Fannie’s and Freddie’s free lunch"

When commentators as diverse as Willem Buiter, Marc Faber, and Joseph Stiglitz (to name a few) agree on something, whatever their shared opinion is probably merits consideration. In this case, it’s a cause near and dear to most readers’ hearts, namely, that the rescue efforts orchestrated by the officialdom are poorly designed. They treat taxpayers […]

CBO Comes Close to Saying It Made Up That $25 Billion Freddie, Fannie Rescue Cost Estimate

Readers may have seen that we cast aspersions on the CBO’s estimate that the Fannie and Freddie rescue program would “probably” cost taxpayers $25 billion. We had noted that the estimate was only through 2009 because that’s how far the authorization extends, but there is no way that Fannie and Freddie will ever be cut […]

Dubious Assumptions in CBO’s Fannie, Freddie $25 Billion Rescue Cost Estimate

And subprime was contained…… I am curious: what expertise does the CBO have in developing an independent view of the two GSE’s exposures? The CBO was no doubt dependent on the GSEs and/or the Treasury for key elements of the analysis. Moreover, if you connect the dots suggested in the Bloomberg story, the analysis was […]

Fed, Comptroller of the Currency Due Diligence Sham for Fannie, Freddie

The political theater continues. The New York Times reports in “Bush Prods Congress, as Financiers Are Inspected,” that the Fed and the OCC are giving Fannie and Freddie the once-over: Bank examiners from the Federal Reserve and the Comptroller of the Currency are inspecting the books of the nation’s two largest mortgage finance companies, Fannie […]

Freddie Considers Hail Mary Pass: $10 Billion Stock Sale

It’s truly remarkable what a short squeeze and the threat of tighter governmental oversight can do. According to the Wall Street Journal, Freddie Mac is now considering raising $10 billion of equity to keep a government rescue at bay, or at least contained. But what are we to make of this attempt at stagecraft? The […]

Phony Accounting on Fannie, Freddie Rescue Legislation

I got this far in the Wall Street Journal article, “Capitol Hill Storm Envelops Fannie-Freddie Rescue” and started seeing red: The Congressional Budget Office is expected to estimate the cost of Treasury’s proposals to the federal government to be in the tens of billions of dollars, according to people familiar with the matter. That estimate […]

Merrill: US May Face "Financing Crisis"

Ambrose Evans-Pritchard appears to be trying to corner the market in apocalyptic financial news. But his sources aren’t evangelicals, survivalists, or even goldbugs. The experts he cites are with respected financial firms, meaning they don’t sound alarms casually. Even more significant, the terms they are using to describe what might be coming are uncharacteristically dire. […]

Vote of No Confidence: Dollar Tanks (And More on Fannie and Freddie)

So much for the notion that the not-quite-a-rescue-plan for Fannie and Freddie would calm troubled markets. Equities gave a raspberry yesterday and overnight, the TED spread widened 11 basis points to 133 basis points (a sign interbank funding trouble may be nigh) and today the currency markets, which initially seemed to take the news in […]

Thin Gruel in Paulson Statement re Fannie, Freddie; Fed Opens Discount Window

For those looking for some concrete action (which was what many market participants hoped for), Paulson issued a statement that amounts to hand waving. Full text from Bloomberg: Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies. […]

Bloomberg: Paulson Seeks Congressional Authority to Bail Out Fannie, Freddie

So much for merely making reassuring noises, as the Wall Street Journal reported an hour or so ago. Unless the authorities can call in favors and get a strong show of buyer interest at the Fannie sale of $3 billion sale of short-term debt tomorrow, it’s hard to imagine the markets will take well to […]