Friday Afternoon Sneaks
July 11th, 2008 by 
reality
Indymac Bank was taken over by the FDIC.
The banking regulator said it closed IndyMac after customers began a run on the lender following the June 26 release of a letter by Sen. Charles Schumer, D-N.Y., urging several bank regulatory agencies that they take steps to prevent IndyMac’s collapse.
Posted in Fixed Income, Government, Real Estate | 
July 11th, 2008 at 8:11 pm
I am still waiting for the other shoe to drop (Fannie Mae and Freddie Mac). Isn’t the United States required by law to take them over if they fail?
July 11th, 2008 at 10:32 pm
The snowball just went over the hill today. Now begins the acceleration and eventual avalanche. The “other shoe” has already started dropping. The Feds are NOT required to bail out the GSEs if either fail. It is only “implied” in their names -”Government” Sponsored Entities - just as the “Federal Reserve” is neither “Federal” nor “Reserve”. It’s a private corporation owned by the big banks and greedy bastards. It has no affiliation with the federal government. It’s all a scam.
Fannie and Freddie each have about a penny and a half of capital to cover the $5 TRILLION of mortgage loans they have insured. That’s a fact, not an exaggeration. When they fail, the “Fed” will tack another $5 trillion onto our already monstrous public debt, interest rates will skyrocket, and treasuries will drop like a stone as their perceived “AAA” rating becomes clearly questionable. Then they get downgraded, the Chinese start dumping treasuries and it’s all over but the cryin’.
It will be getting very ugly in a relatively short period of time. Mark my words.
July 12th, 2008 at 9:20 am
http://www.nytimes.com/2008/07/11/business/11fannie.html?ref=business
“Under a 1992 law, Fannie or Freddie could be put into conservatorship if their top regulator found that either one is ‘critically undercapitalized.’”
“Under a conservatorship, the shares of Fannie and Freddie would be worth little or nothing, and any losses on mortgages they own or guarantee — which could be staggering — would be paid by taxpayers.”
Does anyone else expect another jump start on Monday (rates and liquidity)?
P.S. I have been unable to convince a single friend or relative to ditch stocks and bonds. I hope that I am just a worrywart and that everything turns out ok.
July 12th, 2008 at 7:07 pm
Friday afternoon sneaks are now typically followed by Weekend Loans Backed By Us Taxpayers
Fannie, Freddie to Get $15 Billion From U.S., the Times Says
http://www.bloomberg.com/apps/news?pid=20601087&sid=adGvdKB7NpAg&refer=home
While I’m mowing the lawn, I didn’t realize I was lending billions to bail out those who don’t know how to run a 2ndary market.
Ben B is a 2 trick pony (lower rates, open discount window)
Henry Paulson is learning from the master.
July 13th, 2008 at 4:20 pm
“The Treasury has moved to increase its line of credit to Fannie and Freddie. The amount of the credit and its terms would be decided later, Paulson said.
Congress has set that credit at $2.25 billion for each company.
In addition, Treasury has been given the power to buy stock in the two companies, if necessary and on a temporary basis.”
http://www.marketwatch.com/news/story/white-house-fed-step-rescue/story.aspx?guid=%7BF942EDC2%2DE975%2D4F01%2DAF6F%2DF1D7591E4526%7D&tool=1&dist=bigcharts&
I gotta put my money in the highest rate junk bonds I can find. How can I lose with the government backstopping everything!