Freddie Mac says needs $1.8 billion from taxpayers

[KMAN]

When is enough enough?

Freddie and Fanny are killing us, and from what I hear not one thing was in the financial regulation bill regulating Fannie and Freddie. WTF?


Freddie Mac says needs $1.8 billion from taxpayers | Reuters

 

[blastoff]

Tell F & F to get the money from Boney Frank. He can get it from his former fudge-packer roomie who likely made a bundle running his queers for rent operation out of Boney's basement.

 

[boedicca]

And yet, FM and FM were not included in the Financial Reform Bill that was supposed to save us from Too Big To Fail.

What's up with that?

 

[Dr.House]

No problem, I'll just go out back and shake the money tree and get it for them....



Uh oh.... The money tree is dead...

 

[daveman]

Wait...I've been repeatedly assured that the FMs were in much better shape than the eeeeevil bankers, and were in fact competently run.

 

[The Rabbi]

Note that this is $1.8B MORE than what they've already gigged the taxpayer for.

At this point Fan/Fred exist solely as a private slush fund for the Democrats. There is no economic reason for them to exist. The Dums can pass principle forgiveness, moratoria on foreclosures, restructurings etc etc all to curry favor with voters at our expense.

 

[Big Fitz]

When is enough enough?

Freddie and Fanny are killing us, and from what I hear not one thing was in the financial regulation bill regulating Fannie and Freddie. WTF?


Freddie Mac says needs $1.8 billion from taxpayers | Reuters

Slit this monster's throat now.

 

[boedicca]

There used to be a $400B ceiling on funding to bail out Fannie Mae and Freddie Mac. Congress got rid of that ceiling earlier this year. At that point, bail outs for FM/FM totaled around $160B.

So the big question is: with $240B left of headroom under the ceiling, why did Congress feel it necessary to limit the FM/FM bail out:

The most likely answer is the rumored "August Surprise" in which the Obamanoids orchestrate "forgiveness" for many of the underwater mortgages in the country.

 

[The Rabbi]

There used to be a $400B ceiling on funding to bail out Fannie Mae and Freddie Mac. Congress got rid of that ceiling earlier this year. At that point, bail outs for FM/FM totaled around $160B.

So the big question is: with $240B left of headroom under the ceiling, why did Congress feel it necessary to limit the FM/FM bail out:

The most likely answer is the rumored "August Surprise" in which the Obamanoids orchestrate "forgiveness" for many of the underwater mortgages in the country.

The administration steadfastly denies there is any truth to that. Of course they are lying, like the dogs they are. There will be tremendous pressure to "do something" to save their bacon before the election. Between Congress' low low approval ratings, ethics scandals, and the generally crappy economy they will need to "do something" for people, i.e. buy their votes.

 

[boedicca]

I read this comment on Instapundit yesterday. It is spot on:

I’ve given some thought to James Pethokoukis’ “August Surprise,” and I think he’s right that something like a bailout of underwater loans will happen soon.

Economically, however, there is little upside and a whole lot of potential downside. The worst of these loans are never going to be paid back. The “owner” of a $200,000 Inland Empire home that he paid a half-million dollars for, was never going to pay back the whole amount anyway. So there’s really no argument that the bailout will have a stimulus effect. There’s simply no additional spending created by eliminating an unpayable
debt.

But there are two potential downsides: one inflationary and one deflationary. Right now banks are sitting on many billions of dollars worth of unlisted foreclosed homes. The President’s action would give the illusion of a floor under housing prices and just might be all that it takes for banks to release their backlog. If all that shadow inventory hits the market at once, housing prices in the communities already hardest hit will be hit even harder. That’s the deflationary effect.

The inflationary problem is a little more obvious. As a practical matter, Fannie and Freddie debt is probably already being counted as federal debt even if it isn’t currently being accounted for that way. So that argues
that the effect of transparently accounting for the debt will be negligible. However, the rumored amounts being discussed for the bailout (between two and eight hundred billion) are far smaller than the loss of
value in the nation’s housing market. Bond buyers will have to ask themselves if another round of bailouts is coming. A bailout of this size (and one that circumvents Congressional authority) is a very visible signal that the Administration will do anything it can get away with try to prop up the economy. I can’t see how this risk wouldn’t put upward pressure on treasury yields—and thus, mortgage rates.

Now, imagine both consequences of this bailout hitting simultaneously: The bailout is followed by a temporary floor under housing prices, precipitating a deluge of backlogged inventory hitting the market right
about the time that mortgage rates start creeping up.

No upside and a big potential downside. So why do it?

Politics. Three of the four states with the hardest hit housing markets are California, Florida, and Nevada. All three could see Republicans elected to the Senate. Not just any Republicans: In Florida and Nevada, the GOP candidates are Tea Party Republicans, while in California, the Democratic candidate is among the most liberal in the entire chamber. If purple states like Florida and Nevada will elect ruby red Republicans to statewide office, and a deep blue state like California can’t retain a liberal Democrat, imagine the political effect over the next two years.

There will be a rightward sprint in both parties. Furthermore, if all three of those states go Republican, it’s likely that Washington’s Murray and Wisconsin’s Feingold are in real trouble too. That could bring the GOP total in the Senate to 52. One party just doesn’t pick up a dozen seats in the Senate without the other party arriving at a little introspection.

And Barack Obama is deathly afraid of a little Democratic Party introspection under those circumstances. The fundraisers in the Democratic Party will find another nominee to back in the primary. He will be a lame duck within his own party.

To use a military term, California, Florida, and Nevada are Obama’s final protective fire. They are where all rounds of ammunition will be expended to stop the enemy’s advance. He will gladly commit the nation to hundreds of billion dollars of additional debt so that the people of those states feel just a little bit better–at least until they discover that even with a smaller mortgage, without a job, they can’t afford even that.

Instapundit

 

[CrusaderFrank]

Fannie and Freddie are almost identical companies, ask 100 people in banking or real estate what the difference is and 99 will give you an incorrect answer.

Consolidate them, and sell them on Ebay

 

[The Rabbi]

Good post.
It will not "stimulate" anything except waste and fraud.

The gov't needs to stop foreclosure moratoria and restructuring programs. These are proven failures. They need to dump the stuff on the market, let the market clear at whatever price the houses will sell, and then we will see recovery set in. this was the lesson from the S&L debacle.

 

[daveman]

I read this comment on Instapundit yesterday. It is spot on:

I’ve given some thought to James Pethokoukis’ “August Surprise,” and I think he’s right that something like a bailout of underwater loans will happen soon.

Economically, however, there is little upside and a whole lot of potential downside. The worst of these loans are never going to be paid back. The “owner” of a $200,000 Inland Empire home that he paid a half-million dollars for, was never going to pay back the whole amount anyway. So there’s really no argument that the bailout will have a stimulus effect. There’s simply no additional spending created by eliminating an unpayable
debt.

But there are two potential downsides: one inflationary and one deflationary. Right now banks are sitting on many billions of dollars worth of unlisted foreclosed homes. The President’s action would give the illusion of a floor under housing prices and just might be all that it takes for banks to release their backlog. If all that shadow inventory hits the market at once, housing prices in the communities already hardest hit will be hit even harder. That’s the deflationary effect.

The inflationary problem is a little more obvious. As a practical matter, Fannie and Freddie debt is probably already being counted as federal debt even if it isn’t currently being accounted for that way. So that argues
that the effect of transparently accounting for the debt will be negligible. However, the rumored amounts being discussed for the bailout (between two and eight hundred billion) are far smaller than the loss of
value in the nation’s housing market. Bond buyers will have to ask themselves if another round of bailouts is coming. A bailout of this size (and one that circumvents Congressional authority) is a very visible signal that the Administration will do anything it can get away with try to prop up the economy. I can’t see how this risk wouldn’t put upward pressure on treasury yields—and thus, mortgage rates.

Now, imagine both consequences of this bailout hitting simultaneously: The bailout is followed by a temporary floor under housing prices, precipitating a deluge of backlogged inventory hitting the market right
about the time that mortgage rates start creeping up.

No upside and a big potential downside. So why do it?

Politics. Three of the four states with the hardest hit housing markets are California, Florida, and Nevada. All three could see Republicans elected to the Senate. Not just any Republicans: In Florida and Nevada, the GOP candidates are Tea Party Republicans, while in California, the Democratic candidate is among the most liberal in the entire chamber. If purple states like Florida and Nevada will elect ruby red Republicans to statewide office, and a deep blue state like California can’t retain a liberal Democrat, imagine the political effect over the next two years.

There will be a rightward sprint in both parties. Furthermore, if all three of those states go Republican, it’s likely that Washington’s Murray and Wisconsin’s Feingold are in real trouble too. That could bring the GOP total in the Senate to 52. One party just doesn’t pick up a dozen seats in the Senate without the other party arriving at a little introspection.

And Barack Obama is deathly afraid of a little Democratic Party introspection under those circumstances. The fundraisers in the Democratic Party will find another nominee to back in the primary. He will be a lame duck within his own party.

To use a military term, California, Florida, and Nevada are Obama’s final protective fire. They are where all rounds of ammunition will be expended to stop the enemy’s advance. He will gladly commit the nation to hundreds of billion dollars of additional debt so that the people of those states feel just a little bit better–at least until they discover that even with a smaller mortgage, without a job, they can’t afford even that.

Instapundit

Great. I'll be buying a house late this year/early next...and the Dems are going to fuck it up for me.

 

[saveliberty]

The scene: Oval Office

Present: Freddie Mac representative and President Obama

Obama: So, you need $1.8B to keep things rolling over there?

FMR: Yes sir.

Obama: Well we ought to be able to handle that (opens desk drawer and out falls $1.5B). Maybe it will be a little harder than I thought (gets up and trips over $1.4B on the floor by his desk).

FMR: You could just have the Treasury sned it over Mr. President.

Obama: No, no, I know its here (moves $1.45B off of the couch). Opens liquor cabinet. See, its right here. You might need the extra $1B. Take the whole thing.

FMR: It is kind of bulky Mr. President. Can the Secret Service help me?

Obama: Oh, I'm sorry. Of course. Say, you wouldn't know anything about the event would you? Nobody over at the NSA will tell.

 

[Big Fitz]

I read this comment on Instapundit yesterday. It is spot on:

I’ve given some thought to James Pethokoukis’ “August Surprise,” and I think he’s right that something like a bailout of underwater loans will happen soon.

Economically, however, there is little upside and a whole lot of potential downside. The worst of these loans are never going to be paid back. The “owner” of a $200,000 Inland Empire home that he paid a half-million dollars for, was never going to pay back the whole amount anyway. So there’s really no argument that the bailout will have a stimulus effect. There’s simply no additional spending created by eliminating an unpayable
debt.

But there are two potential downsides: one inflationary and one deflationary. Right now banks are sitting on many billions of dollars worth of unlisted foreclosed homes. The President’s action would give the illusion of a floor under housing prices and just might be all that it takes for banks to release their backlog. If all that shadow inventory hits the market at once, housing prices in the communities already hardest hit will be hit even harder. That’s the deflationary effect.

The inflationary problem is a little more obvious. As a practical matter, Fannie and Freddie debt is probably already being counted as federal debt even if it isn’t currently being accounted for that way. So that argues
that the effect of transparently accounting for the debt will be negligible. However, the rumored amounts being discussed for the bailout (between two and eight hundred billion) are far smaller than the loss of
value in the nation’s housing market. Bond buyers will have to ask themselves if another round of bailouts is coming. A bailout of this size (and one that circumvents Congressional authority) is a very visible signal that the Administration will do anything it can get away with try to prop up the economy. I can’t see how this risk wouldn’t put upward pressure on treasury yields—and thus, mortgage rates.

Now, imagine both consequences of this bailout hitting simultaneously: The bailout is followed by a temporary floor under housing prices, precipitating a deluge of backlogged inventory hitting the market right
about the time that mortgage rates start creeping up.

No upside and a big potential downside. So why do it?

Politics. Three of the four states with the hardest hit housing markets are California, Florida, and Nevada. All three could see Republicans elected to the Senate. Not just any Republicans: In Florida and Nevada, the GOP candidates are Tea Party Republicans, while in California, the Democratic candidate is among the most liberal in the entire chamber. If purple states like Florida and Nevada will elect ruby red Republicans to statewide office, and a deep blue state like California can’t retain a liberal Democrat, imagine the political effect over the next two years.

There will be a rightward sprint in both parties. Furthermore, if all three of those states go Republican, it’s likely that Washington’s Murray and Wisconsin’s Feingold are in real trouble too. That could bring the GOP total in the Senate to 52. One party just doesn’t pick up a dozen seats in the Senate without the other party arriving at a little introspection.

And Barack Obama is deathly afraid of a little Democratic Party introspection under those circumstances. The fundraisers in the Democratic Party will find another nominee to back in the primary. He will be a lame duck within his own party.

To use a military term, California, Florida, and Nevada are Obama’s final protective fire. They are where all rounds of ammunition will be expended to stop the enemy’s advance. He will gladly commit the nation to hundreds of billion dollars of additional debt so that the people of those states feel just a little bit better–at least until they discover that even with a smaller mortgage, without a job, they can’t afford even that.

Instapundit

Great. I'll be buying a house late this year/early next...and the Dems are going to fuck it up for me.

Hold on as long as you can Dave... Wait till the toilet gets flushed.