View Full Version : Fannie and Freddie stocks take a tumble
U376977
07-11-2008, 11:32 AM
Talks between the President and Treasury Sec. Paulson this morning covered the possibility of the nationaliaztion of the GSE's. If that happens mortgage loans will all but STOP. Mortgage rates will rise to 10%+. Lenders will have no place to sell the mortgages. Housing will further sink and your homes value will fall at least another 30%.
The below is a quote from CNN Money.
"Immediately after the markets opened, shares of Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) fell more than 47% from their already battered closing price the day before. They soon rebounded later in the morning but Fannie shares were still down about 28% and Freddie shares were off 24% in early afternoon trading."
Their stocks are down 65-75% for the year.
DividedThigh
07-11-2008, 11:57 AM
might be a good time to buy them, since the govt is on the hook, and cant let them go insolvent, hello, dt
might be a good time to buy them, since the govt is on the hook, and cant let them go insolvent, hello, dt
LOL! Dude! I was SO about to post that!
DividedThigh
07-11-2008, 12:03 PM
well there you go at least the pain is not affecting my brain, lol
U376977
07-11-2008, 12:07 PM
Dodd is holding emergency press conference right now to try to slow the panic.
DividedThigh
07-11-2008, 12:09 PM
panic selling creates opp for the level headed, lol
U376977
07-11-2008, 12:16 PM
LOL! Dude! I was SO about to post that!
What the govt would do is hold them in receivership. We really don't want that to happen. The GSE's have sold MBS (sorry that is industry lingo people might not know) =Mortgage Backed Securites) to the tune of 5.4 Trillion. Say again Trillion. Do we really want the govt. on the hook for associated losses that could occur on a book of assets up to 5.4 Trillion dollars. NOT!
And Fannie and Freddie currently need 75 Billion in captial to cover proposed reserve requirements. They have 1.4 Trillion in offsheet assets.
well there you go at least the pain is not affecting my brain, lol
Bro, I have been praying for you!
DividedThigh
07-11-2008, 12:23 PM
i agree, but the govt backs these agencies so if they do become insolvent the govt would def back them, unavoidable now, dt
DividedThigh
07-11-2008, 12:24 PM
Bro, I have been praying for you!
thanks for several days now, it seems the pain just wont let up, i hope it is healing, i believe it is healing, now that is better, lol
What the govt would do is hold them in receivership. We really don't want that to happen. The GSE's have sold MBS (sorry that is industry lingo people might not know) =Mortgage Backed Securites) to the tune of 5.4 Trillion. Say again Trillion. Do we really want the govt. on the hook for associated losses that could occur on a book of assets up to 5.4 Trillion dollars. NOT!
And Fannie and Freddie currently need 75 Billion in captial to cover proposed reserve requirements. They have 1.4 Trillion in offsheet assets.
It is clearly very serious. and NO I dont want the government to back it.
here is the problem. the government CAUSED it with creating law that REQUIRED lending money to people who really didnt have the ability to PAY the loan back in the first place.
now on the back end, we are stuck.
DividedThigh
07-11-2008, 12:29 PM
that is what happened for sure ferd, and now the law of the harvest comes in to bite us, dt
RandyWayne
07-11-2008, 12:42 PM
It is clearly very serious. and NO I dont want the government to back it.
here is the problem. the government CAUSED it with creating law that REQUIRED lending money to people who really didnt have the ability to PAY the loan back in the first place.
now on the back end, we are stuck.
Exactly. HUD rules instituted during the 90's (and WHO was president then? Mmmm?) effectively created a quota system where people who should never have received a home loan, suddenly got one. Of course this was the beginning of the housing bubble because home sales started taking off for the short term, thus over inflating prices until we are where we are now. And once the sales/appreciation entered its full swing, the banks themselves took it from there as they tried to capitalize on an easy short term buck, not realizing it would HAVE to end soon.
U376977
07-11-2008, 01:53 PM
Exactly. HUD rules instituted during the 90's (and WHO was president then? Mmmm?) effectively created a quota system where people who should never have received a home loan, suddenly got one. Of course this was the beginning of the housing bubble because home sales started taking off for the short term, thus over inflating prices until we are where we are now. And once the sales/appreciation entered its full swing, the banks themselves took it from there as they tried to capitalize on an easy short term buck, not realizing it would HAVE to end soon.
I am not quite as cynical as you are in your last sentence, it is much more complicated than that. But you are mostly correct.
Government is on the hook to back the GSE. However, the extent of the backing is not clearly defined. Ultimately, Fannie and Freddie are so important to our economy/USA and World that Govt will have to stand fully behind them. If they fall there will be almost no mortgages. Home ownership will fall levels below the Great Depression. Mortgage rates have risen almost 2 pts. today alone on the GSE troubles.
wish I had been in a place to pull the trigger. they both bounced pretty good off the bottom. a guy could have made a killing in about 3 hours today.
RandyWayne
07-11-2008, 03:02 PM
If we had a hundred grand, we'd be putting it in GM right now!
If we had a hundred grand, we'd be putting it in GM right now!
Dude, I am so wishing I was in a position to really watch the financials and do something!
if a guy could fined a company that was not too over exposed to bad paper but who's stock is taking a beating with the rest of the market, they could be printing their own $$$$$$
I hit on J C Penny's a few years ago when they are at $10 I sold at 50 and they went above that.
right now I have a baby so I don't have cash to do something.
RandyWayne
07-11-2008, 03:06 PM
We just bought a house so we're in the same boat.
We just bought a house so we're in the same boat.
a buddy of mine bought American Airlines stock right after their stock took that nose dive and either filed bankruptsy or nearly did after 9/11. he did quite well.
U376977
07-11-2008, 03:34 PM
a buddy of mine bought American Airlines stock right after their stock took that nose dive and either filed bankruptsy or nearly did after 9/11. he did quite well.
You all are missing the option to buy short. You would profit if the stock went down. Financials are a perfect buy for that. BoA, Chase, Wells Fargo, all will tumble if Fannie and Freddie are nationalized. Home builders are no doubt going down more. Anything oil connected, can someone say....Airlines. Even trucking co.
You all are missing the option to buy short. You would profit if the stock went down. Financials are a perfect buy for that. BoA, Chase, Wells Fargo, all will tumble if Fannie and Freddie are nationalized. Home builders are no doubt going down more. Anything oil connected, can someone say....Airlines. Even trucking co.
as much as this might very well go further south, dont you think the short ship has already sailed? a lot of these stock are already down 50% or better.
if you have money and it isnt in the market right now, it might be better to sit around and wait till it shakes out some.
it wont be long before bottom fishing pays pretty big.
U376977
07-11-2008, 08:24 PM
as much as this might very well go further south, dont you think the short ship has already sailed? a lot of these stock are already down 50% or better.
if you have money and it isnt in the market right now, it might be better to sit around and wait till it shakes out some.
it wont be long before bottom fishing pays pretty big.
Well in a typical recession the stock market shrinks as much as 30% before rebounding and we are about at that point. Then it climbs higher than ever.
But we have never been in this economy before. Housing is the worst that it ever has been. The affect is just now starting to hit local and regional banks. There are some 600 banks that have assets > 650 millioin that are in danger of failing. There will no doubt be a some major bank failurs before this is over. So financial stock will probably sink a lot farther. And there is no doubt that a few MORE of the major builders will go bankrupt.
The housing issue coupled with oil rising and devaluation of the dollar has created the "perfect storm."
One of my clients today told me he had put back for a "rainey day" but this is a hurricane! He has been in business over 20 years. This may be his last.
Point being we might be at the bottom....if God has mercy. But I don't hear calls for repentance...churches are not praying. Not even people who are supposed to be able to discern the times and seasons. Just look at the AFF...we have thousands of hits and comments about LS and magic hair. Many threads about, "can a person do...and still be saved." Not a lot about the state of our wicked nation and the flashpoints of Judgement that we are walking into headlong!!
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