Fanny And Freddie

[gobears 0]

Speaking of naked shorting....gee wonder why the SEC is only worried about naked shorts on the major financial firms and not in the other sectors? Hmmm....WASHINGTON (Reuters) - The Securities and Exchange Commission will issue an emergency rule later on Tuesday to stop "naked" short selling in major financial firms, including Fannie Mae and Freddie Mac, the SEC said.Short sellers borrow shares they consider overvalued and sell them. If the price drops, they repurchase the shares, return them and pocket the difference.In a naked short sale, the investor sells stock that has not yet been borrowed. Sellers sometimes deliberately fail to deliver securities as part of a scheme to manipulate the stock price.The emergency rule would require any person making a short sale in the listed securities to borrow the securities before the short sale is effected and deliver the securities on the settlement date.The SEC has already proposed rules to curb naked short selling abuses and prevent market price manipulation.

[BigLebowski 0]

Speaking of naked shorting....gee wonder why the SEC is only worried about naked shorts on the major financial firms and not in the other sectors? Hmmm....WASHINGTON (Reuters) - The Securities and Exchange Commission will issue an emergency rule later on Tuesday to stop "naked" short selling in major financial firms, including Fannie Mae and Freddie Mac, the SEC said.Short sellers borrow shares they consider overvalued and sell them. If the price drops, they repurchase the shares, return them and pocket the difference.In a naked short sale, the investor sells stock that has not yet been borrowed. Sellers sometimes deliberately fail to deliver securities as part of a scheme to manipulate the stock price.The emergency rule would require any person making a short sale in the listed securities to borrow the securities before the short sale is effected and deliver the securities on the settlement date.The SEC has already proposed rules to curb naked short selling abuses and prevent market price manipulation.

Exactly. Why do they do it for Fanny and Freedy? Of course we know why. Think of all of those thousands of companies this has already happened to and they didn't do shit about it. Think of all of the people losing their jobs and losing at least part of their 401Ks. It is disgusting how often this happens and it's pure greed with no regard to others well being. It is one thing to deal with getting laid off, it is a completely different one when your retirement savings are stolen from you. NOT ONE person or company has ever been convicted of naked short selling to drive down prices, yet it's explicitly illegal and happens everyday. Supposedly this is what was happening to Fannie and Freddie...or so they think. So we are going to rescue them and keep profits private, but risks continue to be public. When you have loans valued at close to 4 times your debt, what is the reason the feds are opening up public funds to them again?Of course you can't say anything about this type of thing or you become a whiner. And since Phil Gramm had nothing to do with the subprime crisis and says some really intelligent things like it won't be any big deal when people start getting laid off, he should know what a whiner sounds like.

[BigLebowski 0]

If you have time, here is an interesting lecture on it. Big presentation on shorting

[El Guapo 8]

If you have time, here is an interesting lecture on it. Big presentation on shorting

I clicked on this last night, and if I had not been so tired I would have listened to the entire thing. Very interesting. I am in the industry and I did not know some of what was going on.One of the things that irked me recently is that Goldman Sachs gave a short sell recommendation (which is unheard of) on Citibank (pretty sure it was Citi, could have been Wamu now that I think of it) last month. They had been shorting them for 3 months prior to that. This is market manipulation on a grand scale. Then whichever firm it was, came back and gave GS a sell rating, pretty much out of spite. (Maybe it was Wachovia, damnit now I cannot remember, but it does not really matter the Bank, it is the process that is messed up, and Goldman Sachs is considered, no pun intended, the Gold standard in investment banking)

[BigLebowski 0]

So now that it is a done deal who is next? My money is going on the auto industry. Fear not, the gov is making the CEO's of Fannie and Freddie step down so that should fix everything. I went to a buddies last night to see Chuck Liddel get KTFO and his wife is a bankruptcy lawyer. Her firm is one of two that are authorized to handle cases in Georgia. They have set a record each and every month this year and their internal people don't expect it to slow down for at least another 24 months. My wife had to lay off 12 people this past week and they were begging to keep their jobs and take up to a 50% pay cut. There is a good chance there will be another layoff in early November. Also read that said 9% of homeowners are either behind on their payments or are already in foreclosure. Unemployment rate is crushing, salaries are flat, and costs are going through the roof. Forgive me if I don't agree with all of you economic optimists.

[copernicus 0]

So now that it is a done deal who is next? My money is going on the auto industry. Fear not, the gov is making the CEO's of Fannie and Freddie step down so that should fix everything. I went to a buddies last night to see Chuck Liddel get KTFO and his wife is a bankruptcy lawyer. Her firm is one of two that are authorized to handle cases in Georgia. They have set a record each and every month this year and their internal people don't expect it to slow down for at least another 24 months. My wife had to lay off 12 people this past week and they were begging to keep their jobs and take up to a 50% pay cut. There is a good chance there will be another layoff in early November. Also read that said 9% of homeowners are either behind on their payments or are already in foreclosure. Unemployment rate is crushing, salaries are flat, and costs are going through the roof. Forgive me if I don't agree with all of you economic optimists.

And who's fault is it that they overextended themselves with mortgages they couldnt afford? I dont buy that very many of them were tricked by unscrupulous brokers. And you can thank Joe Biden and his MBNA cronies for about 15% of the foreclosures.This is the first month that unemployment was higher than the average during the Clinton administration., which was already artificially low due to the tech bubble, and most likely will be adjusted downward. Oil is in freefall and may be headed to $80/bb, gasoline and heating costs will follow, and that will bring food costs down with them, since most of their increase was cost of shipping.Forgive me if I dont agree with all of you economic doomsdayers.

[Nimue1995 1]

So now that it is a done deal who is next? My money is going on the auto industry. Fear not, the gov is making the CEO's of Fannie and Freddie step down so that should fix everything. I went to a buddies last night to see Chuck Liddel get KTFO and his wife is a bankruptcy lawyer. Her firm is one of two that are authorized to handle cases in Georgia. They have set a record each and every month this year and their internal people don't expect it to slow down for at least another 24 months. My wife had to lay off 12 people this past week and they were begging to keep their jobs and take up to a 50% pay cut. There is a good chance there will be another layoff in early November. Also read that said 9% of homeowners are either behind on their payments or are already in foreclosure. Unemployment rate is crushing, salaries are flat, and costs are going through the roof. Forgive me if I don't agree with all of you economic optimists.

I guess this is one of the benefits of living in Montana where the economic boom in real estate never inflated the prices that high. We are taking a hit to some degree especially those that built a lot of spec houses. But on the whole while the real estate market is sluggish, it's not been as bad as some of the rest of the country. I guess if you don't get a huge boom then the bust isn't as bad either. Anyway, we are probably still one of the lowest per capita income states in the union. But now at least the housing is getting more affordable again . I just hope there's someone here that will be interested in a 4 bedroom 2 bath home for $120,000 or so when we get this rental fixed up again to sell.

[El Guapo 8]

And who's fault is it that they overextended themselves with mortgages they couldnt afford? I dont buy that very many of them were tricked by unscrupulous brokers. And you can thank Joe Biden and his MBNA cronies for about 15% of the foreclosures.This is the first month that unemployment was higher than the average during the Clinton administration., which was already artificially low due to the tech bubble, and most likely will be adjusted downward. Oil is in freefall and may be headed to $80/bb, gasoline and heating costs will follow, and that will bring food costs down with them, since most of their increase was cost of shipping.Forgive me if I dont agree with all of you economic doomsdayers.

I less than three you for this. I have been saying this for 3 months, that it would hit that by December.Also, eff OPEC in the A. On friday they actually came out and said that they were going to reduce supply to try and keep oil at 100/barrel. This is why the commodities markets are b.s.

[copernicus 0]

I less than three you for this. I have been saying this for 3 months, that it would hit that by December.Also, eff OPEC in the A. On friday they actually came out and said that they were going to reduce supply to try and keep oil at 100/barrel. This is why the commodities markets are b.s.

We have a meeting tomorrow with one of the big institutional investment advisers. It will be interesting to hear their view on the takeovers and oil/energy.Hopefully if oil does get below 100 demand doesnt pick up and hopefully neither party takes their eye off the ball on drilling/alternatives. We should be able to learn from the repeated mistakes of the past, and just the vigor of the discussion has helped put downward pressure on prices.

[El Guapo 8]

We have a meeting tomorrow with one of the big institutional investment advisers. It will be interesting to hear their view on the takeovers and oil/energy.Hopefully if oil does get below 100 demand doesnt pick up and hopefully neither party takes their eye off the ball on drilling/alternatives. We should be able to learn from the repeated mistakes of the past, and just the vigor of the discussion has helped put downward pressure on prices.

PM me what you here please.

[copernicus 0]

PM me what you here please.

I'll repeat it here, since its of general interest in the thread.Their basic points were:1) "Bail out" is an inappropriate word. The government always implicitly backed the FM's derivative securities and directly owned loans. this action just explicitly recognized that obligation, and was done mainly to mollify foreign governments holding FM derivatives by taking over the management of the process.2) The cost to the tax payer will be minimized by restoring confidence and liquidity to the markets, increasing home values and reducing the FMs exposure.3) The spread between FM obligations and US Treasuries is a big short term opportunity, and once the markets price in the new explicit guarantees the value of those obligations will increase signficantly.4) Despite the drop in oil prices they are concerned about inflation in the near term and are encouraging the Trustees to consider investments that respond well in an inflationary environment and increasing the funds leverage.5)They expect the dollar to do well and Europe to respond to liquidity in the US positively and recommended shifting from the bottom to the top of the allocation for international equities.Those were the main points, if I remember any others I'll post them here and PM you.

[BigLebowski 0]

Wow...are we finally going to stay out of something and let Lehman declare insolvency? Sounds like it might actually happen.I am not much of a Greenspan fan, but he didn't have too kind of words to say today:The U.S. credit squeeze has brought on a "once-in-a-century" financial crisis that is likely to claim more big firms before it easesI need someone of greater intelligence to explain this to me.Greenspan, who left office in 2006, said he expected more failures before the crisis eases. While regulators "shouldn't try to protect every single institution," he said, companies should be kept from failing "in a sharply disruptive manner" to prevent further shocks.Why do they have to fail to be a shock? I mean, why wouldn't a bailout be considered a shock? Passing a shit sandwich from company to company can only go on for so long before someone has to eat it.

[copernicus 0]

Wow...are we finally going to stay out of something and let Lehman declare insolvency? Sounds like it might actually happen.I am not much of a Greenspan fan, but he didn't have too kind of words to say today:The U.S. credit squeeze has brought on a "once-in-a-century" financial crisis that is likely to claim more big firms before it easesI need someone of greater intelligence to explain this to me.Greenspan, who left office in 2006, said he expected more failures before the crisis eases. While regulators "shouldn't try to protect every single institution," he said, companies should be kept from failing "in a sharply disruptive manner" to prevent further shocks.Why do they have to fail to be a shock? I mean, why wouldn't a bailout be considered a shock? Passing a shit sandwich from company to company can only go on for so long before someone has to eat it.

the L word.Liquidity.FNMA and FRE stockholders did not get bailed out and the US didnt pick any obligations it didnt already have. If the biggest market maker for loans were to disappear, leaving their bondholders nothing and some administrator to deal with their directly held loans you would see something approaching the great depression as the dominos start to fall.LEH on the other hand impacts primarily their own shareholders and the liquidation wont have the feedback effect that FNMA and FRE would.

[copernicus 0]

"During emergency meetings between federal officials and investment bank executives over the weekend, SEC Chairman Christopher Cox indicated to the bankers that the agency plans in a few days to impose new protections against abusive "naked" short-selling, a person familiar with the matter said Monday"

[Nimue1995 1]

I have a question for probably Cope or anyone else in that business. I have my IRA in a particular company and was wondering how do you tell if that company is stable and not going to fail like some of the giants that have in the past few days & weeks? And if I was to move it (because of distance logistics, not fear) how can I tell which company is secure to move it to? It's become a concern to me because that's our one safety net left should something go horribly wrong with my husband's health. If we lose that then we really could be in shit city.

[El Guapo 8]

I have a question for probably Cope or anyone else in that business. I have my IRA in a particular company and was wondering how do you tell if that company is stable and not going to fail like some of the giants that have in the past few days & weeks? And if I was to move it (because of distance logistics, not fear) how can I tell which company is secure to move it to? It's become a concern to me because that's our one safety net left should something go horribly wrong with my husband's health. If we lose that then we really could be in shit city.

If it is with a bigger firm it should be covered by SIPC insurance up to $500,000. So it should not be a big concern of yours. Take Merrill Lynch for instance, a huge firm bought up by BAC. All investable assets are fine, just another firm will be the holding company. 99% of the time that is what would happen. If your money is in ABC mutual fund, but held at charles schwab, you still own the mutual fund, even if schawb fails.Hope that helps.

[Nimue1995 1]

If it is with a bigger firm it should be covered by SIPC insurance up to $500,000. So it should not be a big concern of yours. Take Merrill Lynch for instance, a huge firm bought up by BAC. All investable assets are fine, just another firm will be the holding company. 99% of the time that is what would happen. If your money is in ABC mutual fund, but held at charles schwab, you still own the mutual fund, even if schawb fails.Hope that helps.

Thank El, that does ease my mind some. Unless of course inflation goes through the roof. But then nothing would help anyway,lol.

[copernicus 0]

Thank El, that does ease my mind some. Unless of course inflation goes through the roof. But then nothing would help anyway,lol.

A more balanced portfolio with a healthy share of TIPS might ease your inflation concerns somewhat. You can lower your nominal return risk and add some inflation risk protection at the same time (at the cost of potential nominal return, but it sounds like your not in a position for a lot of risk anyway.

[El Guapo 8]

Care to share what firm your money is held at?

[Nimue1995 1]

A more balanced portfolio with a healthy share of TIPS might ease your inflation concerns somewhat. You can lower your nominal return risk and add some inflation risk protection at the same time (at the cost of potential nominal return, but it sounds like your not in a position for a lot of risk anyway.

Sorry to be somewhat ignorant where some of this is concerned but what is TIPS? I don't speak acronym very well. Now I do have some of my IRA invested in a fairly large regional bank here in the Rockies. Haven't heard anything that there's any problems with them but I still have concern that it might go like Lehman Bros and blow up overnight. I've pretty much diversified over a fair amount of industries but the bank is one of my "larger" holdings. Until now I always figured that banks were pretty safe investments.

[El Guapo 8]

Treasury Inflation Protected Securities. Basically short term government notes.Your banking institution, has nothing to do with your IRA money, as long as it is invested in securities or debt instruments that are not of that particular bank.

[copernicus 0]

Treasury Inflation Protected Securities. Basically short term government notes.

Just to expand on this, the core Rate of Return is somewhat lower than on other Treasuries but you get an added principal adjustment for inflation.

[Nimue1995 1]

Thank you both. I'll check into them.

[BigLebowski 0]

(re:unemployment rate).....and most likely will be adjusted downward.....

It looks like they are at least adjusting some numbers.Government data Friday showed retail sales fell 0.3 percent in August, while July’s decline was revised downward from 0.1 percent to 0.5 percent. Even more worries, the August decline came despite a sharp drop in gasoline prices and follows up on a weak showing in the second-quarter GDP report

[Nimue1995 1]

Should we be concerned? Sorry to Cope and El but this doesn't sound too good. Top Economist: Americans Should Worry About Bank Deposits if Congress Doesn't ActPosted Sep 15, 2008 12:58pm EDT by Aaron Task in Investing, Recession, BankingRelated: LEH, MER, BAC, AIG, WM, ^DJI, ^GSPCUpdated from 12:58 p.m. EDT With the "financial storm of the century" hitting financial institutions, many Americans are worried about the safety of their bank deposits. While the FDIC insures individual accounts up to $100,000, the reaction to IndyMac's failure this summer -- lines outside retail branches -- shows Americans have limited faith in the Federal Deposit Insurance Corp., which guarantees individual accounts up to $100,000.Update: "The banking system is safe and sound," Treasury Secretary Hank Paulson declared at a mid-afternoon press conference Monday, seeking to ameliorate such concerns. "Nothing is more important than the stability and orderliness of our financial markets [and] regulators remain vigilant," Paulson continued. "We're working through a difficult period in our financial markets right now as we work of some of the past excesses, but the American people can remain confident in the soundness and resilience of our financial system." But Americans are justified to be worried, says Nouriel Roubini, of NYU's Stern School and RGE Monitor, who notes there is already a "slow-motion run on retail banks" occurring nationwide.That "run" could accelerate as people realize the FDIC fund has about $50 billion to "insure" about $1 trillion in assets at the nation's financial institutions, says Roubini. "They're going to run out of money" unless Congress acts soon to recapitalize the FDIC.In addition, the recent spike in number of banks on the FDIC's "troubled list" is only through June, meaning even that inflated number understates the problem.The intent here isn't to add to people's anxieties, but Roubini is one of the few market watchers to correctly predict the severity of this ongoing credit crisis. If nothing else, he says people with accounts exceeding $100,000 in value should spread their money - and the risk - among different firms.