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Freddie Mac seeks further $10.6bn in US aid

PeteEU said:
Freddie and Fannie need money because of the recession. Because normally solvent people are not able to make their mortgages. And that all comes back to what the private sector did to get the US into the crapper it is in now.. :2wave:
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I agree, lack of regulation caused the problem but what I don't agree with is your solution to the problem. We can't keep throwing money in the hole and pretend things will get better. This bailout will go straight in the corporate elite's pocket, not to the middle class. They will do what they always do... Take the money and run.
 
Lord Tammerlain said:
If the refusal in the 10.6 billion caused Freddi to go bankrupt, many of mortgages that it has either securitized or insured might be called in being one issue

Another issue is that Freddi and Fannie are right now are backing over 80% if I recall correctly of all new mortgages in the US, at a low interest rate. (at least lower then what private institutions would be willing to offer. If Freddi and Frannie no longer were backing new mortgages, the housing market would take another large drop in demand. Such a drop in demand would lead to another drop in housing prices, and of course more strategic defaults and foreclosures
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It doesn't look like I'm getting an answer from Pete, so I'll ask you:

First, why would you assume that the US government's refusal to provide this $10.6B would cause Freddie to go bankrupt?

Second, why would you assume that an eventual bankruptcy would cause these mortgages to be "called in"?

Third, why would you assume that said mortgages being "called in" would result in 60+% of people being kicked out of their homes?

If the refusal to provide this $10.6b would really have such massive, trillion-dollar effects, one would assume that there wouldn't need to be debate over this. Even if the government refused, it would be likely that the market would step in to provide the needed money. Given that this doesn't seem to be the case, I think any doomsday claims about what would happen if this money weren't provided are a bit absurd.
 
jujuman13 said:
Link
BBC News - Freddie Mac seeks further $10.6bn in US aid

Quote(US mortgage giant Freddie Mac saw a loss of $8bn (£5.3bn) in the first three months of 2010 and said it would ask for a further $10.6bn in state aid.)

In my opinion it would be an Obamanation to continue dripping cash into either of these organizations.
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And with Fannie Mae asking for 8.4 Billion more, it pretty much closes the deal. We've got to force the US Government away from these two irresponsible GSEs.
 
Phantom said:
I agree, lack of regulation caused the problem but what I don't agree with is your solution to the problem. We can't keep throwing money in the hole and pretend things will get better. This bailout will go straight in the corporate elite's pocket, not to the middle class. They will do what they always do... Take the money and run.
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Solution? Not saying it is a solution. I am saying there is no choice. If you let Fannie and Freddie go belly up, the only ones who will be making a ton of money out of it, is the private sector corporate elite. They will be able to buy up 55% of the market for next to nothing and then slowly force people out of their homes. Having Fannie and Freddie go belly up will only hurt the average American.
 
Before I went to college in the mid-nineties, I was in residential construction. I used to live out of a suitcase, moving from one boom town to the next.

While doing a 4 year stint in the Bay Area of CA, I noticed a strange phenomenon. After we finished the 'model homes' in a new sub-division, the sales office would open to a long line of investors that would come in and buy homes that weren't even built yet. Apparently, these homes would be sold 4 or 5 times on paper before the first family actually moved in.

This side of the housing bubble never seems to get mentioned. The fact that the price of the homes increased with each sale definately contributed to the over pricing of homes, far beyond their reasonable value.

So the bubble pops and you find out that you are way under water on your mortgage payments vs. the value of your home. 60 minutes ran a segment last Sunday where they interviewed home buyers that were simply walking away from their houses that weren't worth anywhere near what they were paying. It was mentioned that two thirds of home buyers are actually in this same situation.

If everyone in this situation decided to bail on their mortages, you'd see a lot more than F&F going down the tubes. The vaccuum would take the country along with it.
 
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Burning Giraffe said:
And with Fannie Mae asking for 8.4 Billion more, it pretty much closes the deal. We've got to force the US Government away from these two irresponsible GSEs.
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that FDIC obligation of the government to back your bank deposits - would you want the government to similarly rescind that commitment
the government placed the GSEs in receivership and acquired them, assets AND liabilities
it's a contractural obligation of the government which is being fulfilled - if the additional money is appropriated
 
justabubba said:
that FDIC obligation of the government to back your bank deposits - would you want the government to similarly rescind that commitment
the government placed the GSEs in receivership and acquired them, assets AND liabilities
it's a contractural obligation of the government which is being fulfilled - if the additional money is appropriated
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We should start looking for a way out then.
 
PeteEU said:
Solution? Not saying it is a solution. I am saying there is no choice. If you let Fannie and Freddie go belly up, the only ones who will be making a ton of money out of it, is the private sector corporate elite. They will be able to buy up 55% of the market for next to nothing and then slowly force people out of their homes. Having Fannie and Freddie go belly up will only hurt the average American.
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You keep saying this, yet you refuse to provide any evidence that it's true. How about backing up your wild speculation with some proof?
 
Mickey Shane said:
Before I went to college in the mid-nineties, I was in residential construction. I used to live out of a suitcase, moving from one boom town to the next.

While doing a 4 year stint in the Bay Area of CA, I noticed a strange phenomenon. After we finished the 'model homes' in a new sub-division, the sales office would open to a long line of investors that would come in and buy homes that weren't even built yet. Apparently, these homes would be sold 4 or 5 times on paper before the first family actually moved in.

This side of the housing bubble never seems to get mentioned. The fact that the price of the homes increased with each sale definately contributed to the over pricing of homes, far beyond their reasonable value.

So the bubble pops and you find out that you are way under water on your mortgage payments vs. the value of your home. 60 minutes ran a segment last Sunday where they interviewed home buyers that were simply walking away from their houses that weren't worth anywhere near what they were paying. It was mentioned that two thirds of home buyers are actually in this same situation.

If everyone in this situation decided to bail on their mortages, you'd see a lot more than F&F going down the tubes. The vaccuum would take the country along with it.
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A great deal of the housing bust is centered around speculative buying, as you say, which is the main reason why I don't like the bailouts of these lendors.

Do I get a bailout for the hit I took in the market? Same difference in my mind.
 
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