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So Fannie and Freddie have now been delisted from the New York and Chicago Stock Exchanges. They’ll still be traded though, in the over-the-counter (OTC) market. If any knows of any valid reasons why government entities should be traded at all, never mind very profoundly bankrupt ones, do pray tell. Buying and selling broke government agencies can only be profitable if the taxpayer gets stuck with the difference, as far as I can make out.
Bruce Krasting has noticed that the Fed has moved $4.4 trillion of F&F’s "assets" onto their respective balance sheets. While the two GSE's have not, so far. What's that rumble I hear in the distance? Yes, the Republicans have called for all these "assets" to be put on the government's balance sheet, and they're right of course, that's where they belong. Bank of America has just confessed that they’ve pulled the same Repo 105 stunts that Lehman had, and the SEC is "going after them". Fine, good, though far too late, but what moral standing does a government have that pulls its own versions, and on a massive scale, of Repo 105s?writes Michael Rapaport in the WSJ.”Repos are short-term financing arrangements that allow banks to take bigger risks on securities trades. Classifying the transactions as sales instead of borrowings—as in the Repo 105 strategy—allows a bank to take assets off its balance sheet and thus reduce its reported leverage.”,
You tell me how that differs from what the US government is doing with Fannie and Freddie. Sure, there's one main difference with Lehman and Bank of America: the scale of creative accounting/fraud. $4.4 trillion is real money. If Washington would do for itself what it pretends to demand from the financial industry, the US would be -technically- broke. But let’s be honest: is it really such a grand idea to keep alive a government and a banking system that can only keep their heads above water by flouting the laws of the land? Is that truly in the best interest of the citizens of the country, or does it in truth only scam those citizens ever more for the benefit of an elite that isn't even clever enough to not lose bigtime at the nation's crap tables?
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Well, at this point in time, that is as obviously useless as it is too late, isn't it? The losses have already been incurred, and no new insurance scheme would make one iota of difference to those losses. If prices keep on dropping for homes that carry past mortgages, Fannie and Freddie will lose trillions of dollars in taxpayer funds, until they simply implode, causing trillions more in said losses. And the best we can come up with in the face of that is years of talks about reforming the system, talks that will undoubtedly largely be dominated by the same clueless clowns that brought down the system in the first place?
If as a nation that's all you got, it might be a better idea to just close the door, hand the key to Putin, and go live somewhere else. For this is not going to be good enough. It will be for some, of course, but for the people it will be a disaster of proportions the likes of which no-one wishes to ponder.
Fannie and Freddie are the main cause why home prices in the US have risen so high that millions of Americans are being evicted from their homes as we speak simply because they can't afford to live in them anymore. Fannie and Freddie (and the FHFA and FHLB and Ginnie Mae) have been used to guarantee any mortgage at any price and at any liar's conditions, and all at the risk of the American people.
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There are very few Americans who have any idea how bad the situation is their country is in. With a government that specializes in creative accounting, outright fraud and ties to the financial industry, that shouldn't be a major surprise.
It's still tragic, though.
