[mEDITate-OR:
accept what your are told
without asking a few quite relevant questions...
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tonight Bill@CR posted the chart below on FMae's REO sales.
and tells U.S. that FMac will be next week.
(FHA was last week - which we went back and re-found)
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JGBellHimself
Very, very good, Daniel.
There are three questions that might assist all of U.S. in fully understanding where we are with FMae, and FMac, VA and FHA, however.
And, while we did post them earlier, Disqus "moderated" them out of your view.
We will reconstruct them, and post them a wee skoshi bit later.
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JGBellHimself
First, precisely how many bad ARMs and subprime RE loans did FMae&FMac buy before the collapse, and how much is at stake under the "guarantee" we - W, you and U.S. - gave China?
At the beginning the Wall Street commercial banksters only made about US$ 1 Trillion in safe "conventional" RE loans, but quickly shifted over to buying/creating US$ 2.5 Trillion very bad ARMs and subprime l0ans, in the sand states. And, at the beginning FMae&FMac made almost none. Then, just before the collapse, F&F's CEOs did start buying bad ARMs and subprimes to boost their returns, in order to pay themselves huge salaries.
Both FMae&FMac, and their CEOs, justly deserve to be pilloried, and outed in public, for that gross mismanagement - maybe their E&O insurance could be used to pay U.S. back.
But, Mr. D, how many bad ARMs and subprimes did they buy - 300 or 300 thousand? How much are we being asked to "cover" - 300 Million or 300 Billion?
Is it more, or much less, than the Wall Street US$ 2.5 fraud?
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JGBellHimself
Second, precisely how many RE loans did FMae&FMac make during and after the ought-not-8 year of their "nationalization"? And, how much are we on the hook for those "mandatory" RE loans?
As you of course know, at the beginning of ought-not-8 FMae&FMac were making over 85% of all RE loans - if only bcuz the prior 50% of market share made by Wall Street "securitizations" had disappeared. Then in July when China stopped using their foreign trade surplus US$ to buy FMae&FMac debt, and as you point out even FMae&FMac stopped lending, your President (bcuz he certainly was not mine) W decided to do what only a compassionate conservative R would do - he "nationalized" both FMae&FMac.
For two reasons: one, to "guarantee" China's investment and talk them into continue to lend to U.S. by buying TBills instead; and two, to force/enable FMae&FMac to continue to make RE loans to U.S.
Then, W required both the Treasury and the FED to buy FMae&FMac stock and RE securities - in the Billions of US$ ! Or, is now in the US$ Trillions?
So, after all of that, FMae&FMac made huge numbers of RE loans to U.S. - why, bcuz they were ordered to buy any and all RE loans from U.S.
True, those were not made at the peak prices of the collapse, but they were not made at the bottom prices of the debacle. either - assuming that we are even at the bottom, yet! But, since FMae&FMac were REQUIRED to make those RE loans, how many did they make - 300 or 300 thousand? And, how much is at stake here - 300 Million, or 300 Billion?
While it is perfectly justifiable to criticize FMae&FMac for what they did wrong, what about when they did what we - W, you and U.S. - forced them to do it? How much, in US$, should be ascribed to that?
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JGBellHimself
Third, all of these forced repurchases, and/or BoA write offs, you cover in your article, are being made under a sweetheart deal that was made at the very beginnings of the investigation of the RE collapse. Even before we knew all about "robo-signings"!
Some of U.S. thought that was a very bad deal for FMae&FMac, and for the rest of U.S. Guaranteeing FMae&FMac's bad loans, for China, was one thing; guaranteeing all of BoA's, et al, is quite another.
But, have the new CEOs of FMae now figured out a way to force BoA, even under that sweetheart deal, to buy some of the bad ARMs and subprime RE loans that Countrywide sold FMae? Will FMae also be able to force Chase to buy back some more of WAMU's bad ARMs and subprimes? Et tu Wells and Wichovia's bad loans? How sad would that be?
Et tu FMac, FHA and Farm Home loans?
Similarly, there is another "approved deal" for the Big, Bad, Banksters, being now outed by the NY State AG. What is the full exposure of the rest of U.S. if that "wonderful deal" is made? How much more are we being forced to "cover" now?
Bcuz we have learned to trust your judgment, if you can find some of the answers to these questions/issues, it will assist all of U.S. in deciding what to do about the GSEs, and also how best to do it.
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Fannie's Bailout Grows by $5 Billion as It Squeezes Bank of America
The firm is taking a more aggressive stance on forcing the institution to repurchase its bad loans,
which is good news for taxpayers
http://www.theatlantic.com/business/archive/2011/08/fannies-bailout-grows-by-5-billion-as-it-squeezes-bank-of-america/243178/
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Fannie Mae sells record number of REO in Q2
http://www.calculatedriskblog.com/2011/08/fannie-mae-sells-record-number-of-reo.html
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FHA sells record number of REO in June
http://www.calculatedriskblog.com/2011/08/fha-sells-record-number-of-reo-in-june.html
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