Fannie Mae and Freddie Mac have had a few good trading days this week, but they’re still ripe for a near-term Treasury bailout if capital problems persist. As NY Times writer Gretchen Morgenson pointed out Sunday, this bailout is complicated by credit default insurance (or swaps). She’s covered this otherwise under-reported area of the credit
Henry Paulson
Bloomberg did an extensive profile on Treasury Secretary Henry Paulson today, which covers a lot of biographical and also serves as a good timeline of the credit crunch. Former Goldman Sachs CEO Paulson was brought in to run the Treasury after the Bush administration struggled with its first two men in the post: Paul O’Neill
Fixed and ARM rates are down about .25% in the two weeks since I suggested rates could be in a +/–.25% trading range until Fall. July’s inflation reports released in the past few trading days showed the highest consumer price spike since 1991, when California’s current governor hit his prime with Terminator 2; and the
Markets were buzzing today about this weekend’s Barron’s story on Fannie Mae and Freddie Mac. Not just buzzing, but trading down as this story kicked off a new wave of negative credit market sentiment. The Dow was down 180 points, and at the time of this writing, Asian and European markets followed suit as we
The model of securitizing mortgages was born around the time of the S&L crisis and has spent the last 20 years building momentum. The problem was that the so-called high-yield mortgage backed securities were constructed from subprime loans … only they received A-paper credit ratings on a relative basis. For example subprime mortgage backed securities
Morgan Stanley will be paid $95,000 to advise the Treasury Department on how to handle their new, self-imposed power to control Fannie and Freddie. This is a responsible move as the two firms own or guarantee half of all outstanding mortgages in the U.S., and since the private mortgage-backed securities markets are still seized up,
HR 3221, The Foreclosure Prevention Act of 2008, passed the House of Representatives Thursday, July 24 and passed the Senate Saturday, July 26 by majority votes—the president is expected to sign it into law this week. Below are highlights of the 694-page bill that are most relevant for consumers. No More $729,750 Conforming Loans As
As I sat down at my desk this morning to write this, I glanced over at my Aurora mouse pad, my First Magnus coffee mug, my American Home pencil holder, my Indymac calendar, my Paul Financial paper clips, as my Greenpoint duck looked down from the computer. I thought to myself, “I hope that my
Yesterday during testimony to the House Financial Services Committee on Financial Regulation, Treasury Secretary Henry Paulson said there is a forthcoming plan to allow private equity firms and hedge funds to invest in banks. Right now, private investors cannot accumulate more than a 9.9% stake in banks without bumping into regulations, but this could rise
CONGRESS BETTER DO SOMETHING It appears that Congress can’t quite decide what to do on the current mortgage legislation. The broad thinking suggests that if they can’t do something prior to their summer recess, when they return the November election will consume their time. Although doing nothing is an option, let’s hope they don’t take
Fannie Mae and especially Freddie Mac, the government backed purchasers of most of our country’s mortgages, are believed to be insolvent by many (including St. Louis Fed President William Poole) to be insolvent. Markets continue to punish both organizations this week, bringing FNMA down 76% in the past 12 months, and FHLMC down 83%. They
Federal Reserve Chairman Ben Bernanke said this morning that rates are “well positioned” to handle inflationary threats to the economy as well as sustained economic weakness. Markets are interpreting this news that rate cuts are over, and rate markets are trading higher on the news this morning. The ‘well positioned’ comment didn’t move markets as
After two days of Congressional hearings exploring the Bear Stearns bailout, it’s bailout burnout. Lawmakers grilling those who brokered the $2-per-share Bear Stearns bailout during a long, strenuous weekend is not unlike the mom in Risky Business grilling her son Joel (Tom Cruise) about why her crystal egg got cracked while she was out of
HUD Secretary Alphonso Jackson, the highest ranking U.S. housing regulation official, announced his resignation today, effective April 18. He cited family reasons, but the FBI has been examining the ties between Jackson and a friend who was paid $392,000 by Jackson’s department as a construction manager in New Orleans after Hurricane Katrina. Also the housing
Fixed and ARM rates are down about .125% this week following last Friday’s Personal Income & Spending report which includes the Fed’s favorite measure of inflation—Personal Consumption Expenditures. The PCE number showed that year-over-year inflation was 2%, within the Fed’s 1-2% target range. Tomorrow and Thursday the Institute for Supply Management releases monthly reports on
This morning Treasury Secretary Henry Paulson announced a 2-8 year plan for modernizing financial market regulation with three main tiers: (1) Increased Federal Reserve power to promote market stability, (2) Consolidating all federal bank charters and insurance companies under one regulator, probably the Treasury, in order to promote safety and soundness of institutions with federal
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