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Is Fannie Mae's Implicit Guarantee In Danger?


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2008 Feb 5, 12:33am   11,515 views  165 comments

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Fannie Mae has the implicit backing of US taxpayers. That is, Fannie Mae, a private company, assumes that US taxpayers will be forced to bail it out no matter how many bad loans it buys from banks.

But the guarantee was always implicit, never written down and specifically agreed to. Is it possible that Fannie Mae will go bankrupt, and Congress will have the courage to refuse to put middle class taxpayers on the hook for ultra expensive mortgages in California and New York?

What happens then?

Fannie Mae has very little cash of its own, but is just a conduit for packaging loans into mortgage-backed bonds. It is the holders of those bonds who will suffer the losses.

#housing

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66   Peter P   2008 Feb 5, 2:11pm  

I am a fan of India but the South Asia sub-continent does not look very stable.

67   surfer-x   2008 Feb 5, 2:14pm  

I am not a fan of India, smelly dirty place.

Lets see, our choices are

Boomer big ass white woman,
Boomer Brother
Boomer Cult member
Boomer big eye'd freak
or War hero.

Me, I'll take the war hero.

68   surfer-x   2008 Feb 5, 2:18pm  

Perhaps some McCain slogans

"I was getting beaten by Charlie when she was gettin high and sucking dick"

"I was voting in the Senate when her husband was gettin high and gettin his dick sucked"

69   Peter P   2008 Feb 5, 2:37pm  

Surfer, what about the non-Boomer medical doctor?

70   Peter P   2008 Feb 5, 2:38pm  

But anyway, congrats to President McCain!

71   surfer-x   2008 Feb 5, 3:27pm  

Peter P, King of Sashimi, non-Boomer M.D.? Hmmm.

I must say that Fred Thompson did a really good job as the D.A. in Law and Order, certainly he would make a gdod President, especially if he had that hot blonde assitant D.A. as Veep.

but then again there's always Gopher from the love boat.

72   EBGuy   2008 Feb 5, 4:24pm  

I’ll take the war hero.
Thus far, [the Silent Generation] are the only generation from which no president of the United States was ever selected.

X-man, have you seen the PBS show Boomer Century? I am still having nightmares. Let's see if I can sum up the finances section: one third well off, one third destitute, one third "What, me worry?". The narrator ends by saying Boomers could continue to have a world changing impact as they age... or, just maybe, they could turn inward and totally screw the generations following them. Oh, its different this time all right... I fear we could be entering the neverending selloff (not to finish until 2046, the end of the Boomer Century).

73   SP   2008 Feb 5, 5:00pm  

surfer-x Says:
“I was getting beaten by Charlie when she was gettin high and sucking dick”

How drunk would a guy have to be to let _that_ happen? http://tinyurl.com/34qzz6

74   Paul189   2008 Feb 5, 9:56pm  

@ HelloKitty,

This country is already bankrupt - now it is just a matter of degree!

75   DinOR   2008 Feb 6, 1:47am  

"one third well off, one third destitute"

Make no mistake, regardless of where they fall economically (the drugs were evenly dispersed!)

Sorry EBGuy, "Boomer Century" ends when we SAY it ends! If you listen at all to Dick Morris (former Clinton adviser) everyone else is ALREADY tired of them! Look how well Obama did last night? White guys voting for a black dude rather than giving their vote to Hillary. In state after state. Whether or not you're an Obama guy (that HAS to be encouraging)

76   anonymous   2008 Feb 6, 2:10am  

McCain-Huck might be the best of all possible tickets.

I didn't vote in the primary yesterday but if I had I'd have voted Osama-Yomama if I could, because I want him to get the nomination instead of Hitlery.

Then it comes down to: McCain and Huck win, yey
Or, Osama-lama-dingdong wins in which case I get to say "It's not my government, do I look like a N- to you?" lol.

It's a win-win.

77   skibum   2008 Feb 6, 2:29am  

RE: McCain-Huckster, I'm down wit McCain, but the Huckster is lame. Who the hell wants a bible-thumping ex-fatso for pres? What kind of a image of Americans does that send out to the rest of the world?

On the other hand, it couldn't be worse that Bill Clinton's image.

78   HiThere   2008 Feb 6, 2:32am  

I am all for Obama......his "CHANGE" campaign is gaining traction and I would not be surprised to see him getting the nomination.

79   Peter P   2008 Feb 6, 2:38am  

This country needs more faith-based programs. So long as we are not ruled by priests, I prefer to have a Christian government.

We need a counter balance to the "religion of peace." I rather have my children worship JC.

80   skibum   2008 Feb 6, 2:45am  

This country needs more faith-based programs. So long as we are not ruled by priests, I prefer to have a Christian government.

We need a counter balance to the “religion of peace.” I rather have my children worship JC.

Then have you and your kids keep it to yourselves. I don't see how you consider your self libertarian-leaning and reconcile wanting government-sponsored religious programs? It's hypocritical.

81   Peter P   2008 Feb 6, 2:51am  

I do not even consider myself religious. But if we are not vigilant, other religions will promote themselves here. Before long, we will see people getting stoned (not the boomer kind of stoned) for non-crimes.

82   skibum   2008 Feb 6, 2:53am  

I do not even consider myself religious. But if we are not vigilant, other religions will promote themselves here.

So, you're arguing promoting one religion in particular (Christianity) merely to prevent other "worse" religions from gaining traction?

Actually, your concerns should make you even more an advocate for separation of church and state.

83   DinOR   2008 Feb 6, 2:57am  

@skibum,

The bible-thumpin' I could live without but I applaud anyone that get's a handle on their weight problem. In that regard I think it is a good example for many Americans.

Hey all you people clogging up the h/c system (and your arteries) I used to be a slob and you can change too! :)

84   DinOR   2008 Feb 6, 2:58am  

"religion of peace" LOL!

I've heard it described as the Religion Of Perpetual OUTRAGE!

85   Peter P   2008 Feb 6, 2:58am  

Actually, your concerns should make you even more an advocate for separation of church and state.

Sure. And I am positive that no candidates will change that.

However, we do want someone who is vigilant.

We do not want to end up like UK:

http://tinyurl.com/384lat

86   Peter P   2008 Feb 6, 3:05am  

I have a weight problem too...

87   surfer-x   2008 Feb 6, 3:11am  

Peter P, you do not have a weight problem, you have a height problem.

88   surfer-x   2008 Feb 6, 3:12am  

BTW, I voted for Obama. Forgot Kalifornia was a closed primary, whoops, modified closed.

89   anonymous   2008 Feb 6, 3:18am  

OMG that kid is cute!! "foking niggoes" lol!!! Her parents are raising her right.

And I have to agree with PeeterPee - we need a right-wing Christian government in the US and the US needs to abandon this namby-pamby "all religions are welcome" BS or we'll end up like Europe, in imminent danger of being swallowed up by the enemy.

Hell I'm not even Christian but I'd rather have to go to Church every Sunday or at least once in a while than lose my country. Hell yeah I'm OK with Muslim activities being reportable by the neighborhood watch and with politicians having to be Christians and even having to tithe.

90   Peter P   2008 Feb 6, 3:25am  

Peter P, you do not have a weight problem, you have a height problem.

It is an aspect-ratio issue after all.

ESR, all truly peaceful religions should be welcomed. We just need to be very vigilant.

91   Peter P   2008 Feb 6, 3:34am  

Obama is actually quite likable.

92   HelloKitty   2008 Feb 6, 3:41am  

Jared from subway commercials would be a better candidate than huckabee. What an inspiring guy!

93   Peter P   2008 Feb 6, 3:48am  

Is McCain-Lieberman a distinct possibility?

94   northernvirginiarenter   2008 Feb 6, 3:58am  

It was inevitable, but I find it shocking nevertheless. From CNBC below:

"Euros Accepted signs popping up in NYC"

"In the latest example that the U.S. dollar just ain't what it used to be, some shops in New York City have begun accepting euros and other foreign currency as payment for merchandise.

"We had decided that money is money and we'll take it and just do the exchange whenever we can with our bank," Robert Chu, owner of East Village Wines, told Reuters television.

The increasingly weak U.S. dollar, once considered the king among currencies, has brought waves of European tourists to New York with money to burn and looking to take advantage of hugely favorable exchange rates.

"We didn't realize we would take so much in and there were that many people traveling or having euros to bring in. But some days, you'd be surprised at how many euros you get," Chu said.

95   DinOR   2008 Feb 6, 4:34am  

NVR,

Is that legal? Can I accept payment in any currency of MY choosing? I hope housing perma-bulls are happy. Of course Lawrence Yun is already furiously spinning this as being "a Wall Street problem".

96   DinOR   2008 Feb 6, 4:36am  

"What an inspiring guy!" LOL!

I thought there was a media flap when it was revealed that Jared's dorm room in college was like a smut distribution center. I heard he charged "late fees" and everything. :(

97   simcha   2008 Feb 6, 4:41am  

Is that legal? Can I accept payment in any currency of MY choosing? I hope housing perma-bulls are happy. Of course Lawrence Yun is already furiously spinning this as being “a Wall Street problem”.

Why not? Here in San Francisco's Chinatown and Oakland's Chinatown you have places that accept Hong Kong Dollars right along side USDs.

98   Peter P   2008 Feb 6, 4:43am  

Can I accept payment in any currency of MY choosing?

So long as you do not decline to accept the peso.

99   DinOR   2008 Feb 6, 5:03am  

I'm sure it happens all the time, especially in the minority communities. I thought only nationally chartered banks with currency desks were allowed to accept foreign currencies in exchange (at the prevailing exchange rate)? Whatever happened to "ALL debts, public AND private"? Is it alright for retailers to openly advertise this?

Just curious.

100   northernvirginiarenter   2008 Feb 6, 5:20am  

It's completely legal to accept or exclude any currency (including USD) from any of your domestic business transactions. Now this said, you still must still deal with the taxman and I'm not sure of GAAP with respect to conversion issues, but I don't think you can pay the IRS in euros or other currencies nor most state taxing authorities where sales tax is involved.

I suspect the existing regulation is well behind the curve on this issue, I could however see it becoming an issue. No doubt, barriers with be created or at least the state will be certain to get a very nice piece of flesh out of the process.

So, significant overhead doing the calculations to deal with taxes.

I wonder if we'll ever see the day when the US government will begin accepting foreign currencies for revenues? Maybe they are already stocking up their foreign reserves? It would be wise to do so, no?

As a practical matter, it's unfortunate that if you did not accept the US peso as payment I'd guess you'd be running transaction rates similiar to a bay area RE agent. Not enough foreign currency circulating here, at least not yet. :-)

101   DinOR   2008 Feb 6, 5:23am  

Oh... before you head home could make the deposit!?

Imagine the line for the merchant's teller?

What a mess.

102   northernvirginiarenter   2008 Feb 6, 5:28am  

From the US Treasury Department:

United States coins and currency (including federal reserve notes and circulating notes of federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts.

However, there is no federal statute which mandates that private businesses must accept cash as a form of payment. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a state law which says otherwise.

Companies are generally allowed, for example, to refuse to accept pennies or bills higher than $20.

103   HARM   2008 Feb 6, 6:14am  

"Interesting take regarding the cause of the mortgage crisis:

http://sweetness-light.com/archive/thank-acorn-and-their-ilk-for-mortgage-crisis

Of course, we cannot assume that liberal politicians actually care about the poor."

Peter P,

I have no love for lobbyist organizations with left-wing agendas like ACORN*. Even so, to accuse ACORN of having been the primary cause of the lending bubble and portraying cheap money pimps like Tangelo of being "victims" of unscrupulous subprime borrowers doesn't just cross the line of revisionist history --it tramples and then sh-ts on it.

Let's be clear about who the major playas were in the lending bubble here, people:

--A Federal Reserve chief predisposed to a) punishing savers and devaluing our currency, and b) an extreme form of laissez faire "self-regulation" for banksters and mortgage pimps.
--A Con-gress and executive branch that never saw a housing subsidy it didn't love, and generally equates "taxpayer risk underwriting" with "affordability".
--A powerful REIC with more paid lobbyists and money spent on campaign bribes than anyone but Big Pharma & Big Defense.

(*disclaimer: Mr. & Mrs. HARM attended a house-buying workshop in 2003 sponsored by ACORN Housing, a non-profit loan counseling service, not to be confused with it's Lobbyist big brother).

104   StuckInBA   2008 Feb 6, 6:15am  

INTC, AAPL, GOOG and now CSCO.
Your local BA doomster reporter brings you yet another disappointing earnings report.

http://finance.yahoo.com/q?s=CSCO

Shares down 6%+ in AH.

I am looking forward to the spring selling season.

105   Peter P   2008 Feb 6, 6:20am  

Even so, to accuse ACORN of having been the primary cause of the lending bubble and portraying cheap money pimps like Tangelo of being “victims” of unscrupulous subprime borrowers doesn’t just cross the line of revisionist history –it tramples and then sh-ts on it.

I know... Folks at S&L is at least 10 times further to the right than anyone here.

Oh, don't forget about Pluto's ingression into Capricorn. :)

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