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. […]
Read more...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 […]
Read more...Various sightings of motion, but none yet of resolution on the Freddie and Fannie fronts, although there are now indications that an announcement of some sort will come soon. Note that the updated story from the Wall Street Journal suggest a rescue is not in the offing, merely a willingness to rescue. If the powers […]
Read more...With the financial system on the exam table, it has been more than a bit troubling, that certain questions are neglected in serious academic/policy debates. The discussion of possible remedies focuses on regulatory solutions, everything from requiring mortgage brokers to be licensed to increasing financial institution capital requirements and having much greater harmonisation, as the […]
Read more...If the rumor du jour is correct, and the Treasury is going to announce plans to inject $15 billion into Fannie and Freddie before trading starts on Monday, the idea of a conservatorship for the GSEs may be off the table. Nevertheless. Adam Levitin of Credit Slips discusses the legal aspects, and this knowledge is […]
Read more...The Times appears to have broken the story (hat tip reader Saboor) that the Treasury is seriously mulling an emergency cash injection into the troubled mortgage giants Fannie and Freddie in the form of some sort of senior equity (the article is not clear on this point, but the Wall Street Journal had mentioned a […]
Read more...Willem Buiter has a characteristically colorful post, “Time for comrade Paulson to pull the plug on the Fannie and Freddie charade” on the prospect of a Fannie and Freddie rescue. Why is it the British can fulminate better than we Americans do? But Buiter’s beef isn’t the operation of the GSEs but the philosophy behind […]
Read more...Nouriel Roubini has consistently been accurate in predicting the course of our snowballing credit crisis, and has also made some important intellectual contributions to the discussion. such as how the breakdown of the Bretton Woods system has lessons for the future of our Bretton Woods 2 currency program. But in my view, Roubini’s post today […]
Read more...The end-game for what was very briefly the nation’s biggest mortgage lender, IndyMac, seemed inevitable, although the signals even as a of a few days ago were that a takeover was not imminent. The timing, coming in the midst of Famnie and Freddie worries, is particularly bad. One can only conclude that this action could […]
Read more...Henry Kaufman, aka Dr. Doom for his prominence and prescience in reading the bond markets during the painful early 1980s credit crunch, said not surprisingly that the Federal government needed to assist Fannie and Freddie. Unfortunately, the more important part of Kaufman’s message is likely to be ignored. The former Salomon Brothers chief economist also […]
Read more...The New York Time reports that the Federal government is leaning towards conservatorship as the approach for handling Freddie and Fannie’s shaky finances. Under this scenario. shareholders are wiped out and taxpayers fund any losses. What I find disturbing about the mainstream media coverage is the refusal to connect the dots between the increasing demands […]
Read more...Just a few weeks ago, experts were saying the credit crisis was on the mend and we could all get back in the pool. But as we discussed in an earlier post, worries about Fannie and Freddie are on the rise, and the increase in agency spreads back in January was probably the biggest trigger […]
Read more...The Wall Street Journal (hat tip Saboor) sends mixed signals in a page one story for tomorrow, “U.S. Mulls Future of Fannie, Freddie.” The Journal reports that contingency planning in case the two GSEs get into trouble has stepped up, yet go to some lengths to take a reassuring tone: The Bush administration has held […]
Read more...We recently wrote about a long overdue shot across the bow from the Senate Banking Committee about initiatives by the Treasury and now the Fed that amount to a regulatory land grab. Why do we think Congress should have done more, sooner? Because the proposed action put the Fed in the position, as with the […]
Read more...Only the Financial Times’ John Dizard would say straight out that monetary authorities (and diesel) constitute a bigger threat to our collective security than America’s pet nemesis, Iran. I would not be surprised to find some readers in agreement. Dizard dispatches Iran first. He starts with some colorful quotes, from Talleyrand (in French) and Lord […]
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