Fannie's Bailout Grows by $5 Billion as It Squeezes Bank of America; but...???

[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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Unofficial Problem Bank list declines to 988 Institutions = not really going away, only disappearing

[mEDITate-OR:

not realize that banks are doing what the unemployed are doing.

simply disappearing..., from view.

But, not really going very far away.

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regulators are pushing troubled banks to find merger partners

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The consolidations have begun in earnest.

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Bank of Whitman, Colfax, WA ($608 million)

Bank of the Northwest, Bellevue, WA ($146 million)

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Unofficial Problem Bank list declines to 988 Institutions
http://www.calculatedriskblog.com/2011/08/unofficial-problem-bank-list-declines.html
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Unofficial Problem Bank list
http://cr4re.com/PBL08052011.html
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The Unemployment picture from Bill@Calculated Risk, and what it may have done to the DOW this morning.

[mEDITate-OR:
not wonder if Bill@CR actually did not impact the DOW this morning...
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Here is what Bill@CR said:
the BLS survey reference week includes the 12th of the month (the 2nd full week of July), and
that was before the economy froze up due to the D.C. debate,
and also before the European crisis really flared up again.
That might be why this report was a little better than expected.
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Here is what Wall Street did:
Stocks erase early gains,
with the Dow falling as much as 65 points
after being up more than 170 points at the open.
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What makes this so very interesting is not only did Bill point out that THIS public opinion survey was conducted BEFORE this weeks bad news, but it was probably distorted, badly, as a result.
What than happened is Wall Street opened heading way up.
Shortly after Bill@CR's first post, with this warning...
the Dow dropped back like a rock.
Bouncing around all day...
trying to figure out whether Bill was correct, and what that meant.
Bill did not bother to clarify for them -
what they should be thinking:)
So, they didn't know what to think.
Nether do we - Bill, them, me and the rest of U.S.
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As they say in Loss Vegas:
"Better luck next time."
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And, now, for something that is never, ever different...
The Best graphs and charts in the whole world !!!
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Here are the earlier employment posts (with graphs):
• July Employment Report: 117,000 Jobs, 9.1% Unemployment Rate
• Employment Summary, Part Time Workers, and Unemployed over 26 Weeks
• More Employment (Duration, Education, Diffusion Index)
• Employment graph gallery
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GDP Report Shatters Illusion of Jobless, Productivity-Packed Recovery + Recession: $131 billion worse than we thought

[mEDITate-OR:
Not think...:
Do not tell U.S. what is true...
only what we want to think is true...
even if that is not even close to reality.
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To adopt the president's favorite metaphor of the ditch and the driver:
The ditch was a 33% deeper than we thought.
And we're driving 33% slower than we hoped.
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And, then...
Take a look at these graphs, via Economist, to soak it in:
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GDP Report Shatters Illusion of Jobless, Productivity-Packed Recovery
http://www.theatlantic.com/business/archive/2011/07/gdp-report-shatters-illusion-of-jobless-productivity-packed-recovery/242761/
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Recession: $131 billion worse than we thought
http://money.cnn.com/2011/07/29/news/economy/recession_gdp/index.htm?iid=HP_LN
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GDP Economic Growth Slower Than Expected In Q2 = Y2Y increase of 1.62 % & M2M of 1.3 %

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GDP Economic Growth Slower Than Expected In Q2
= Y2Y increase of 1.62 % & M2M of 1.3 %
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Seattle = Case-Shiller: Spring Bounce Continues Slightly Weakened

[mEDITate-OR:
miss completely, how stunning the collapse has been in Miami/Tampa and in LossVegas/Phoenix.
see those four cities at the bottom of the 1st chart.
The 2nd chart shows U.S. how bad the 3rd & 4th quarters were last year in Seattle.
The 3rd chart shows U.S. that Seattle & Portland appear to moving in different directions, now.
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JGBellHimself
But, first a little "revisionist RE history" - as in back to The Truth.
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Said you, Tim: "the government’s massive intervention in the market screwed with the natural flow"

Asked we, on SN,L: "Oh Really?"

Do you remember Jan 08, when the private MBS industry had totally collapsed, removing US$ 1.5 Trillion from the funds available for home loans? Do you remember in July 08, when the Chinese informed U.S. that they would stop buying US$ 35-45 Billion of GSE securities PER MONTH? And the other half of the RE funding system collapsed? Do you remember W "nationalizing" FMae&FMac? And, why?

What, precisely, Tim, was "normal" about 2008? The whole funding system for ALL new RE loans simply disappeared, leaving you, Tim, unable to sell you home - except to an all cash buyer. Oh, or to hold your own RE contract. What "interest" did you have in that?

Then over US$ 2.5 Trillion of bad ARMs and subprime RE loans originated by YOUR banksters at WAMU in the Sand States, like po' ol' AZ, collapsed. Leaving almost everyone here more than 50% underwater or down from the peak bubble values. What precisely did "the government" do to create and/or destroy those private Wall Street bankster MBSs? What was "normal" about all that Tim?

With the flood of foreclosures, the home building lobby - all those GD Democrats - supported a First Time Home Buyers Tax Credit. Of course, you remember that, but do you remember what the new home building starts and sales numbers WOULD have been without that sales stimulus? Do you wish to be "predictive" of how far down we would be Far Right now if W had not "nationalized" FMae&FMac?  Oh, and guaranteed the Chinese their "investments" in them would now be safe - fully guaranteed by the full faith and credit of all of U.S.!! What was "normal" about all that Tim?

After an accident many years ago the doctor finally told me we were "back to normal". When we told our best fiend, at the time, he said: "Frankly, we were all hoping for a little better than that."

Are we really "back to normal", Tim? Mind telling U.S., precisely, when and/or where that occurred?

A few tax credit dollars bothers you, does it?  How much did we "loan" the auto industry - per job created?  What did we get for the US$ 3 Trillion we have spent in Iraq and Afghanistan? Peace in our time?

And, now we will return the control of your TV set back to you - until your next visit to The Twilight Zone.

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Tim, the slope of your CS - Seattle home price index (BELOW), from Sep to Feb is stunning. What a "downer"!

Has it really been THAT bad? Do we - you, me and U.S. - have any reason to believe that the 2nd half of this year will not be that bad, too? Don't know if you are trying to sober U.S. up, or drive U.S. to drink.

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Recently, we compared the last five year M2M for Seattle-Portland with LossVegas-Phoenix. SeaPo did show slight selling season gains, but then dropped back down lower every Y2Y. LossPho had NO upticks at all, only slightly slower losses in the selling seasons. Simply all down hill.

IF it ain't over until The Fat Lady sings, what are we gonna do, if she ain't fat no' mo'???

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Note the time/year shift between SeaPo and LossDiego
Later to the party, but now worse off.
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=========
Seattle Bubble Blog
Case-Shiller: Spring Bounce Continues Slightly Weakened
http://seattlebubble.com/blog/2011/07/26/case-shiller-spring-bounce-continues-slightly-weakened/
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The Other Distressing Gap = Wealth gap widens between whites, minorities - "two societies - separate and unequal"

[mEDITate-OR:
fail to realize that we have, not justly...
started another "race war"...
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According to the Census, white men are not creating very many babies.
Or, all woe-men are not willing to have their babies.
According to the Census, Chicanos are now the largest minority among U.S.
And, they ARE having babies, a LOT of new babies.
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What the WASPs badly want to do is reverse history.
What they probably will do is drive all minorities out of their communities, and some states.
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For example, the New South California.
There is a slight problem for them, however.
In the South, they are now outnumbered by both blacks and Chicanos.
In Texas the rubber really hits the road
even with Texas style Gerrymandering they cannot legally "hide" enough of the new Chicanos.
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If you are aware of the racist bigotry that is aimed at Obama, and all blacks...
you must also be aware of the racist bigotry that is now aimed at Chicanos
Tis ugly, and tis gonna get a whole lot worse.
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Wealth gap widens between whites, minorities
http://www.msnbc.msn.com/id/43887485/ns/business-eye_on_the_economy/
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Home Sales: Distressing Gap = Arizona among worst job creators in past five years, losing 253K jobs

[mEDITate-OR:
full miss-understand what Bill@CR has been trying to tell U.S.
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His chart on The Distressing Gap is one of the most, if not the most, interesting of the RE chart that he produces for U.S.
See: below: the list of current RE charts from CR
The Point is that there will BE no job creation in the RE industries until the Distressing Gap closes back into normal ranges.
What Bill@CR can NOT tell U.S. is when that will happen.
There is some economic evidence that we might be closer down in AZ, than in Cal or Nev. There is strong evidence that the robo-signing delays on foreclosures in Fla, and the same delays in NYC; will make the Distressing Gap last much longer, and much deeper in Fla & NYC.
Location, Location and possibly Location.
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This week, the AZBJ published a story with the heading above
What they did NOT tell U.S., or anyone in AZ, was that almost all the job losses were in the home construction businesses.
Not all, obviously, but IF we back out the Sand State's RE bubble machine, there are not many other jobs that were lost - back then.
Today, all that has changed.
The multiplier effects on other industry jobs, and on government payrolls, has only begun to crash.
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The second fall is not going to be the last one, either.

What we are now seeing is the destruction of America, as we know it.

To regain "The America" that white men want to believer always existed, before.

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They will not get what they think they want.

And, neither will we.

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Comment by JGBellHimself:
While the heading is close, what is also very interesting is that by percentage loss the worst states are all the "Sand States" that were devastated by the RE bubble collapse - Cal, Nev, Fla & AZ - plus, Michigan and Georgia. These same states are also those with the most underwater home values.
While AZ and Nev are not also in the top five of size/number of jobs lost, that is only bcuz of the size of the two states being smaller.
And, while AZ did lose huge numbers of construction jobs, many of them MAY simply have moved to Texas. Construction jobs opportunities for Chicanos, VS bad law/policy in AZ.
What is not said, is that AZ may have lost both jobs and people. And the ramifications of that are important to understand
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State	Jobs (June 2011)	5-year raw change	5-year percent change	Years up of past 5	Years down of past 5	Years even of past 5
Nevada	1,115,400	-169,000	-13.16%	1	4	0
Michigan	3,921,200	-417,400	-9.62%	2	3	0
Arizona	2,390,700	-253,100	-9.57%	2	3	0
Florida	7,247,000	-761,500	-9.51%	2	3	0
California	14,068,600	-1,009,400	-6.70%	2	3	0
Georgia	3,818,000	-270,400	-6.61%	1	4	0
Rhode Island	462,400	-31,400	-6.36%	2	3	0
Indiana	2,792,100	-186,700	-6.27%	2	3	0

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On June Home Sales:

• New Home Sales in June at 312,000 Annual Rate

• Existing Home Sales in June: 4.77 million SAAR, 9.5 months of supply

• Graph Galleries:

New Home Sales 

and

Existing Home Sales

On House Prices:

• Case Shiller: Home Prices increase in May

• Real House Prices and Price-to-Rent 

• Graph Galleries: Home Prices

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Home Sales: Distressing Gap
http://www.calculatedriskblog.com/2011/07/home-sales-distressing-gap.html
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Arizona among worst job creators in past five years, losing 253K jobs
http://www.bizjournals.com/phoenix/news/2011/07/25/arizona-among-worst-job-creators-in.html
Arizona jobless rate jumps to 9.3 percent
http://www.bizjournals.com/phoenix/news/2011/07/21/arizona-jobless-rate-jumps-to-93.html
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