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What are We? – Stupid? – by Bruce Krasting – I was disappointed with the Christmas Eve ditties from Treasury and FHFA re: the Agencies. To be honest, I was appalled. The two releases contained significant information. The timing was obviously an attempt to slip in some bad news while everyone is drinking eggnog. Of course that backfired. The blogs, and yes, the MSM disintegrated those that sent the emails out on Christmas Eve. The smell that these announcements have created is not likely to go away anytime soon. – Zero Hedge
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Obama Terrified Of Another Leg Down In Housing, As Fannie Mae And Freddie Mac Are Set To Go In Dramatic New Direction – Joe Weisenthal – … So basically, Fannie and Freddie will be called on to do everything humanly possible to prop up the housing market in the coming years. Mortgage purchases, principal reductions… everything. And as it goes nuts in its efforts, it will need a blank check so that its lenders don’t even get slightly nervous. … – The Business Insider
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Fannie Changes Clear Way for ‘Large-Scale’ Buyouts – By Jody Shenn – The U.S. government’s expanded capital backstops and portfolio limits for Fannie Mae and Freddie Mac increase “the prospect of large-scale” purchases by the companies of delinquent mortgages out of the securities they guarantee, according to Credit Suisse Group analysts. – Bloomberg
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Fannie Mae and Freddie Mac shares soar – By Tom Petruno – But a banking analyst is puzzled by the stock market’s reaction after the government in effect gave the mortgage giants blank checks of federal support. … But exactly how the government’s move makes a payoff for Fannie and Freddie shareholders more likely in the long run, rather than less likely, ought to puzzle most investors. The stock market’s reaction mystifies veteran banking analyst Bert Ely at Ely & Co. in Alexandria, Va. “They’re not going to get anything back,” he says of any investors who have long-term faith in the mortgage giants’ shares. … – LA Times
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The Mother Of All Money Pits – Gary Townsend – The government wants to give the GSEs unlimited support, yet key Democratic leaders have shown they don’t have a clue about the companies’ solvency. A look at the record. – BankStocks.com
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Fed Watch: Why Christmas Eve? – Tim Duy – conclusion – … In short, there are plenty of ulterior motives for Treasury’s expansion of the Mae and Mac bailouts. My favorite is the desire to expand the ability of the GSEs to absorb principle reductions for housing modifications. But the simplest explanation is likely the correct one – the financial damage to the GSEs continues virtually unabated, and the Treasury simply needs to make explicit what was implicit: Mae and Mac are backed by the US government’s full faith and credit … – Economist’s View Blog