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good comment on freddie and fannie

Jim Bianco: So Fannie and Freddie can use their own securities as collateral at the Fed?? Can they create them for the specific purpose of using them as collateral at the Fed? This is so circular I'm getting dizzy? (Imagine writing yourself a check for $1 million and then going to the bank and saying "now that I have $1 million can I get a collateralized loan for $1 million?") Does this make any sense to you?

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Reply to
mozza
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FNM/FRM losses aree 0.2% of assets, which is pretty good in this mortgage market. Plus if the FED allows, theyll soon be able to borrow money at 2% to reloan as mortages in the 6-9% range. Speculators are trying to kill them, but it may be mostly panic-mongering.

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
rick++

But isn't this exactly what the loan people said about the sub-prime scheme. The house that you can't afford will be your collateral for the loan you can't pay off.

Don't know if it was a national ad campaign, but there was one a few months ago where this guy presented a potential $1M lottery ticket to the teller and tried to borrow on it. Sounds much like the above legislature. What's scary is there may be similar odds that it can be pulled off.

Chip

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
Chip

[snip]Does this

doing nothing would be to make things worse - that would mean fewer mortgages granted, another round of liquidity crisis that would surely affect individual investments, and a lower stock market coupled with a continued run on the dollar (making any European vacation a "no- plan").

Finding the responsible parties that caused this mess (the one that requires extraordinary measures) can be done in due time.

Those who do not want this type of crisis to happen again, simply do not give your investment money to those who would speculate in CDO's (collateralized debt obligations, a.k.a. bundled mortgages) with it, and don't buy more house than you can afford.

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
dapperdobbs

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