Updated Fannie/Freddie Linkfest

I have been updating our weekend linkfest on Fannie and Freddie continually.  I keep adding to the Wall Street research section, MSM, and blogs.

Here’s the latest in Wall Street research and media coverage; 

Wall Street Research:

GSE Rescue Plan: Market and Economic Implications  Morgan Stanley      
http://www.morganstanley.com/views/gef/index.html#anchor6881

Mark-to-Market Now Mark-to-Taxpayer  First Trust   
http://www.realclearmarkets.com/articles/mark-to-market_now_mark-to-taxpayer_.pdf

Welcome to the U.S.S.R. (United States Socialist Republic)  Citigroup  (PDF)

The end of America’s bad mortgage dream  Financial Post 
http://www.nationalpost.com/opinion/columnists/story.html?id=27dccda7-61d0-461d-a83e-a3c79530c814

Bringing Out the “Bazooka”  David A. Rosenberg, Merrill Lynch (PDF)   

First thoughts on the market impact of the Treasury’s GSE plan, Goldman Sachs (PDF)

Unblocking the arteries, price support and intervention Nomura Securities
(Blocked_Arteries_PArt 1.pdf

) (Part II PDF)  (Blocked_arteries Part 3.pdf

)

The Long and Short of the Fannie Mae and Freddie Mac Rescue   Northern Trust   (Web PDF)
http://web-xp2a-pws.ntrs.com/content//media/attachment/data/econ_research/0809/document/dd090808.pdf

Paulson Begins Gradual Wind-Down of GSEs within Conservatorship,  Institutional Risk Analyst      

“Somebody’s got some splain’n to do!”  Raymond James
http://www.raymondjames.com/inv_strat.htm

Deja Vu (Again)  John P. Hussman
http://www.hussman.net/wmc/wmc080908.htm

Hank Punts on First Day of Pro Football Season  Cumberland Advisors
http://www.cumber.com/commentary.aspx?file=090808.asp&n=l_mc

Welcome To The Mortgage Business  Ciovacco Capital Management
http://www.ciovaccocapital.com/sys-tmpl/mortgagenew/

Pershing Square Capital Letter to Treasury Department Regarding Fannie and Freddie

This Crisis Is Not Over  John Mauldin, Paul McCulley, Michael E. Lewitt   
http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2008/09/08/this-crisis-is-not-over.aspx

 

What the Mainstream Media had to say:

Wednesday, September 10, 2008

Reduced Exit Packages Urged for Ousted Executives  NYT
http://www.nytimes.com/2008/09/10/business/10comp.html

Government intervention is losing its market mojo  WSJ 
http://online.wsj.com/article/SB122100183460716949.html

Fannie, Freddie Takeover Jolts Preferred Market as Prices Fall   Bloomberg
http://www.bloomberg.com/apps/news?pid=20601087&sid=a2eUYQafZCU8&

Federal Mortgage Success Stories  NYT
http://www.nytimes.com/2008/09/10/business/10home.html


Tuesday,
September 9, 2008

Fannie Mae, Freddie `House of Cards’ Prompts Takeover  Bloomberg 
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3pTtizqxtcA&

Fannie, Freddie To Be Removed From S&P 500  WSJ
http://online.wsj.com/article/SB122099815669516745.html

A Risky High-Wire Act  NYT 
http://www.nytimes.com/2008/09/09/business/09big.html 

Fat Fannie and Freddie  L.A. Times
http://www.latimes.com/news/opinion/la-ed-fannie9-2008sep09,0,7271059.story

A desperate but necessary bailout    MSN
http://articles.moneycentral.msn.com/Investing/SuperModels/a-desperate-but-necessary-bailout.aspx

FANNIE/FREDDIE BAILOUT BALONEY   NYPost 
http://www.nypost.com/seven/09092008/postopinion/opedcolumnists/fannie_freddie_bailout_baloney_128135.htm

U.S. Plan Serves as Template For China to Bolster Its Markets  WSJ
http://online.wsj.com/article/SB122089797255310905.html

Analysts mixed over bailout’s impact on builders  MarketWatch   
http://tinyurl.com/6fx86u

McCain May Privatize Fannie, Freddie; Obama Sees Federal Role  Bloomberg
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1ujoLiLLz78&

Freddie’s dead    Guardian
http://www.guardian.co.uk/commentisfree/2008/sep/08/freddiemacandfanniemae.useconomy

A New Fannie and Freddie  Washington Post 
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/08/AR2008090801908.html

Fannie & Freddie: Buying friends in D.C.   CNN/Money
http://money.cnn.com/2008/09/08/news/companies/fan_fred_buying/?postversion=2008090908

Fannie, Freddie need restructuring to limit risks: IMF   Reuters
http://www.reuters.com/article/ousiv/idUSLAG00304420080909

Rescue Risks Setting Stage For New Woes  WSJ
http://online.wsj.com/article/SB122091498820212291.html

Fannie, Freddie Takeover Ends Lobbying Effort Bigger Than GE’s   Bloomberg
http://www.bloomberg.com/apps/news?pid=20601087&sid=aA6fdeTelSDQ&

Reinventing Two Mortgage Giants: A Big Rebuild or a Teardown?  NYT
http://www.nytimes.com/2008/09/09/business/09future.html

Mortgage Bailout Is Greeted With Relief, Fresh Questions  WSJ
http://online.wsj.com/article/SB122088294934209997.html

Sen. Dodd Questions Fannie-Freddie Takeover  NPR
http://www.npr.org/templates/story/story.php?storyId=94407478

Rescue of Mortgage Giants Displays Paulson’s Clout  NYT
http://www.nytimes.com/2008/09/09/business/09bush.html

Bailout Hits U.S. Agenda  WSJ
http://online.wsj.com/article/SB122092489265913267.html

 The full linkfest continues here.

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What's been said:

Discussions found on the web:
  1. JL commented on Sep 9

    Barry and others, I hate to go ot but do you think that this Friday, we’ll have announcements on WaMu and Lehman’s?

  2. VJ commented on Sep 9

    That rally had a half-life shorter than Sodium-24.
    .

  3. John Borchers commented on Sep 9

    Barry is on vacation leave so the blog will be only automatic postings I assume.

    LEH down 50%. Now which banks hold that stock because now they have another huge loss.

    A depression is in the works. I’m surprised at how many were fooled by inflated oil prices. The only reason the oil went up so much is that market people assumed because the fed was lowering rates that inflation would kick up. Over the short term they were right, over the long term dead wrong.

  4. John Borchers commented on Sep 9

    Each bank is going to bury the other:

    “PNC Financial Services Group Inc. (PNC) said Tuesday that it expects to record a “significant” other-than-temporary impairment charge in the third-quarter from its perpetual preferred stock investments in Fannie Mae (FNM) and Freddie Mac (FRE). ”

  5. JL commented on Sep 9

    John, I fear that you are right. But remember that Sarah Palin is a breath of fresh air.

  6. Donkei commented on Sep 9

    New Century, IndyMac, Countrywide, American Home, Fannie, Freddie, Bear Stearns…

    Lehman and Wamu…

    the FDIC…

    Eventually the entire quasi-private financial system will be gone.

    No worries for the dollar, though. We’ve still got nukes.

  7. PHB commented on Sep 9

    “The Maestro” himself was just on CNBC discussing the merits of this bailout…the funny thing is, I simply could care less what he has to say. It is of absolutely no importance any longer.

    Thanks Barry for keeping us informed with intelligence and spin-free candor.

  8. Steve Barry commented on Sep 9

    The rally ended at about 10AM…it lasted EXACTLY 7 hours…where did I hear that before…oh…I posted that Sunday night.

    Troubled financials will take this opportunity to try and slip news by without getting hurt too much due to general stupidity of the market. For example WaMu looks like they just fired their CEO and Lehman doing a shake-up, but nobody cares with Dow futtures up 260. Rally lasts 7 hours of US trading or less.

    Posted by: Steve Barry | Sep 7, 2008 10:49:11 PM

  9. Doug commented on Sep 9

    Market only seems to react to news that someone is stepping in to fund another’s failing enterprise. If a guy has a drug problem, is it really a positive if he finds a new source of drugs?

  10. John Borchers commented on Sep 9

    Sales force dot com to replace Freddie on the S&P500? OMG. They have got to be kidding.

  11. John(2) commented on Sep 9

    As many others and I forecast it didn’t have any legs but neither do I see a deluge around the corner. We’re just going to see a lot of volatility for the next year while the US economy slips into a major slowdown that is going to last a awhile. Lehman is clearly in deep doo doo and todays drop indicates some people know something. The good bank/bad bank scenario was bs, the bad bank would have needed all kinds of guarantees and a tranche of cash to fly. Most likely outcome; a Treasury managed, what don’t they manage these days, restructuring in which the business is essentially liquidated. The good stuff will be sold to KKR or Abu Dhabi and the bad stuff fire saled at 20 cents on the dollar or less to vulture funds. I don’t think Lehman will be with us by thanksgiving.

  12. Mark E Hoffer commented on Sep 9

    Steve,

    nice!~

    Doug,

    It’s part of the script, it helps to reinforce the, mistaken, belief that “Government” has, much like OZ, “special powers”.

    Ya Know, We’ve been Really Stupid–this G**bage was predicted for us, 100’s of Years Ago, by our Founding Fathers.

    But, hey, Foolish Founders, what did they know, Right?

  13. anon commented on Sep 9

    Barry:

    Regarding the thieves at seeking alpha (SA), were I you, I would send an email to every blog you can find that provides a link to the SA site. I would calmly explain to them your beef with SA, and how each of them could easily be the next SA victim.

    Then, and this is the “kill” part, I would ask each of them to remove the link on their site to SA, and explain how doing so is in their long term interest.

    If no other sites link SA, their traffic will be impacted.

  14. newby commented on Sep 9

    need suggestions for safe place to invest in a deflationary environment besides under a mattress. what was up is down. what was down is down further. Bonds, gold, CDs at 3.6%, where???

  15. newby commented on Sep 9

    need suggestions for safe place to invest in a deflationary environment besides under a mattress. what was up is down. what was down is down further. Bonds, gold, CDs at 3.6%, where???

  16. John Borchers commented on Sep 9

    The big shift is coming as no one wants to invest in the banks anymore. The cash injection game is over and those injections all became quick loses.

    I see 3 poor banks that invested in FMN or FRE preferred which are now losses.

    Without interest to make investments in these it will only get worse, and much worse.

    Ponder this, is an SUV really worth $30k?
    What other things around us have extremely inflated prices compared to the historical average of asset vs. asset?

  17. John Borchers commented on Sep 9

    Newby, if you have any debt of any kind. That’s where to invest right now.

  18. Bruce commented on Sep 9

    And you think that people both inside and outside the usa have much more confidence in the good ole usa than they do in Lehman or the GSE bailout? Well, big shot, what would you advise us to do if you are so smart, that might get a modicum of trust back in our national leaders in this financial crisis??

    Glad you asked.

    No one is going to raise taxes in this downturn…..so.

    1. Cut the fat from next year’s national budget.

    2. Cut the muscle from next year’s national budget.

    3. Circle the bone of next year’s national budget. Gnaw off the gristle..

    National debt increased 250% in one year.
    Completely unacceptable…

    4. You also increase the excise tax on oil to raise the price per gallon to, say, 3.85 so that our nascient alternative programs don’t die in the incubator..if they do, we simply wash, rinse, and repeat the oil crisis in two years.

    5. Same old saw, but finally we realize it is time, just like we give women the vote and tell politicians they can’t be president most of their adult lives…

    We pass a balanced budget amendment. Period.

    Hold the applause…I’m going out to eat with my bride.

    Bruce in Tennessee

  19. Matt Nolan commented on Sep 9

    Thanks for all these links – you provide a great source for information :)

  20. MarkTX commented on Sep 9

    newby,

    invest in yourself :)

    however, if you invest in CD’s, make sure to spread them around various banks/CU’s
    and below FDIC insurance limits.
    From my Schwab account, I have numerous selections available 24/7.
    I also look at local credit unions/banks
    online or in the newspaper to compare rates.

    of course this assumes the FDIC stays solvent…

    Futhermore,
    you can go to The Street.com and or Banrkrate.com
    they both have a bank rating system(s) on their web sites.

    Individual Bonds seem too dangerous
    (risk w/ low return) to me!

    Steve Berry,

    GREAT CALL!!!!!

  21. MarkTX commented on Sep 9

    Correction
    Steve Berry should read Steve Barry.

  22. MarkTX commented on Sep 9

    Bruce in Tennessee,

    what ever happened to the

    The Gramm-Rudman-Hollings Balanced Budget and Emergency Deficit Control Act of 1985

    Former Senator Phil Gramm is still laughing his aaaarse off all the way to the bank-

    that bank being UBS of course.

    Eat good, and I will hold the golf clap until tommorrow…

  23. Mark E Hoffer commented on Sep 9

    Ponder this, is an SUV really worth $30k?
    What other things around us have extremely inflated prices compared to the historical average of asset vs. asset?

    Posted by: John Borchers | Sep 9, 2008 5:33:44 PM

    This, to me, starts on the right track.

    The sooner we start imagining this Economy in x(.6) fashion, the better off we will be.

    The excesses go way beyond the FIRE-sector and the, ever-present, Waste, Fraud $ Abuse of Gov’t, we have entire Industry Verticles, see Industrial Gases, for starters, that are completely artificial.

    Also, to reiterate, T. Boone is right about using CNG for vehicular fueling. Our ‘addiction to Oil’ is contrived, along with our dependence on Foreign Sources.

    We need to wake-up and start doing our own Homework, We’ve seen, enough, of the Answers, others have for us.

  24. Winston Munn commented on Sep 9

    Speaking of deflating assets…

    “….Denver Nuggets guard Allen Iverson has been looking to sell his 14,000 square foot home in Villanova, Pennsylvania for over a year now.

    According to the Wall Street Journal’s Private Properties column, Iverson has dropped the price to a “desperation deal” of $3.999 million — a million less than he paid for it in 2003.”

  25. leftback commented on Sep 9

    Barry,

    Not sure if PBS qualifies as MSM but thank goodness it exists. Calculated Risk today has a link to a one hour Charlie Rose program with El-Erian, Roubini, Gretchen Morgensohn and Floyd Norris. It’s quite accessible and a good way of conveying some of the crisis to people without a professional or trading interest in economics.

    All this stuff will be great book material when this is all over. I know you are itching to write the definitive work on The Maestro’s Dark Legacy…

  26. dave c. commented on Sep 9

    I read Rosenberg’s article ans was amazed to see he thinks the bailout is “good” because it makes the cost of mortgages cheaper and therefore will bring a floor to home prices sooner. Dude, this is what started the mess in the first place! Easy money! If it is so ‘good” for the government to be lending money at the lowest cost, perhaps they should be in everything else as well – credit cards, college loans (oops… they already are), boats, cars,,, everything! Think how large the economy will grow! How come no one has ever tried this before??? dc.

  27. DavidB commented on Sep 9

    A couple thoughts:

    The U.S., Venezuela. The only difference between the two now is that one admits it is socialist.

    Secondly, for the first time in probably half a century a large majority of Americans actually own their own homes…..just not quite directly

    Newbie, you might want to look at very large, long term dividend paying companies. Ones that have at least a 5+ years track record of increasing their dividends and with a dividend ratio of less than .5(that would mean the dividend is less than half what the company is earning thereby showing that they won’t have to take on debt to pay out those dividends to you)

    That won’t means the earnings of these companies won’t suffer but if they are the #1 or #2 company in their industry they are most likely to survive. Also, as the downward pressure hits the market in general the increasing relative yield on these stocks tends to put buying support under them.

    That is not a be all and end all solution but it is a terrific place to start and is also a good strategy in good times as well

  28. leftback commented on Sep 9

    Newby:

    First pay off debt as mentioned above, then sit in cash for a little while, no more than $100K per bank of course, and read a lot -until you have absorbed what is going on here. Then like all of us here, take the first tentative steps to controlling your own investments. Baby steps, start trading small and know your risk. As Barry says, if you don’t know what it is, find out or don’t invest in it. Good luck.

  29. In cash commented on Sep 9

    Can anyone confirm that we had a 90% down day today.

  30. AGG commented on Sep 9

    Here lies Fred.
    A great big rock fell on his head.

    Allowing Bernanke and Paulson to administrate our financial crisis is like giving an ax and frying pan to the foxes who were left in charge of the hen house.

    Timber-r-r-r-r!

  31. Dale commented on Sep 9

    In Cash – Not even close to 90% today. From Richard Russell, “Today was a weakish down-day with down volume only 46% of up + down volume, far from a 90% down day. ”

  32. ponziq commented on Sep 9

    “The U.S., Venezuela. The only difference between the two now is that one admits it is socialist.”

    Not to say it will (or can) work, but at least Venezuelan socialism tries to make the lives of the poor better. Who is the socialism of the United States trying to help? The financial swindlers of the future?

  33. VJ commented on Sep 9

    leftback,

    Calculated Risk today has a link to a one hour Charlie Rose program with El-Erian, Roubini, Gretchen Morgensohn and Floyd Norris.

    That was a great segment. Normal top-shelf stuff from Charlie Rose, the best interviewer around.
    .

  34. Nihilism commented on Sep 9

    Thanks for the updated links BR! Appreciate the efforts as always.

  35. VJ commented on Sep 9

    Bruce,

    No one is going to raise taxes in this downturn

    FDR and Clinton both did it. Raised taxes on the wealthy. Worked like a charm. It all depends what you do with the revenue.

    1. Cut the fat from next year’s national budget. 2. Cut the muscle from next year’s national budget. 3. Circle the bone of next year’s national budget. Gnaw off the gristle..

    Same challenge to anyone who claims we can “cut” our way out of a trillion dollar deficit.

    Show me the money.

    We pass a balanced budget amendment. Period.

    Unnecessary.

    No to mention, the RightWing would use it as an excuse to take it out on the Middle-class and the Poor, instead of addressing all the money and welfare we throw at the Rich & Corporate.
    .

  36. larster commented on Sep 9

    Why is Obama not talking about using his rollback of the Bush tax cuts for the wealthy as a means of developing monies to invest in infrastructure. These investments are not normally used because they take so long to get off the ground, thjus lemiting their short term effectiveness. However, this will be an extended downturn so crank up the bridges and roads. I saw McCain on the news literally yelling how his tax decreases would create jobs. For who, the accountants?

  37. a guy called john commented on Sep 9

    that dodd interview is a joke. “dear lord, i never thought they’d do the thing that i agreed that they would be allowed to do.”

  38. In cash commented on Sep 10

    Thanks Dale.

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