Posts Tagged ‘Fannie Mae’
Posted by Larry Doyle on April 7th, 2009 5:45 AM |
I am no fan of George Soros. I often believe he does not draw a hard line between his political interests and his business interests. His active support with MoveOn.org has made a mockery of any attempt to achieve campaign finance reform.
That said, for those involved in global finance, whether you like George Soros or not, you need to know what he is thinking. Why? George Soros can move markets via his own investment strategies. Additionally, there is little doubt that George is the epicenter in a massive flow of market sensitive information.
To that end, Soros gave a stinging indictment of the change in the FASB’s mark-to-market by stating in a Bloomberg interview,
the change to fair-value accounting rules will keep troubled banks in business, stalling a recovery of the U.S. economy.
“This is part of the muddling through scenario where we are going to keep zombie banks alive,” Soros, 78, said today in an interview with Bloomberg Television. “It’s going to sap the energies of the economy.”
Is this statement a self-serving offering by Soros? Who knows? Is it an attempt to further promote the U.S. as a lessened power? Perhaps. That said, there are others, myself included, who believe the relaxation of the mark-to-market, especially for outfits like Freddie Mac, Fannie Mae, and the 12 regional Federal Home Loan Banks (FHLBs) is nothing short of a charade.
Did Soros’ statement have an impact on the market? Not today. The dollar has been improving of late. However, over the longer haul, the cost of having a number of zombie-like banking institutions will be pressure on the dollar along with increased borrowing costs for the zombie institutions or Uncle Sam who will be backing them.
From a personal perspective, would you lend money to a zombie?
And now, here’s a must-watch little treat. Crank up your speakers . . .
LD
Tags: Fannie Mae, Federal Home Loan Banks, Freddie Mac, George Soros, relaxation of the mark to market, Zombie like banks
Posted in Bank Failure, FASB, Mark-to-Market | No Comments »
Posted by Larry Doyle on March 22nd, 2009 12:26 PM |
I am a proud graduate of the College of the Holy Cross, a Jesuit institution in Worcester, MA. The strength of a Jesuit education lies in the principles of Logic and Morality. While I fully appreciated my classes in Economics, German, Philosophy, and others, my classes in Logic and Morality made the greatest impact on me. Those classes forced me to think, not make rash judgments, take positions, and defend them.
Fast forward to 2009 and a banking industry facing hundreds of billions, if not trillions, of unrealized losses. How do we most effectively, efficiently, and expeditiously address the health of this banking system so that our economy and population can regain its footing and prosper? Let me revert back to the late ’70s and early ’80s and the principles instilled in me by those Jesuits.
My Logic class utilized “decision trees.” My Morality class was based on the principle of “the greatest good for the greatest number.”
What have we learned over the last 6 months, as well as the last 16 years, to help us chart our way forward? (more…)
Tags: AIG, Bank Nationalization, bank shareholder equity, banking losses, bankinig industry, class warfare, College of the Holy Cross, Democratic Congress, executive compensation, Fannie Mae, Freddie Mac, government interest rates, Logic, Moral Hazard, Morality, People's republic of China, populist outrage
Posted in American Consumers, Bank Nationalization, Banking Institutions, Barack Obama, Congress, Democratic Party, Economy, Equity Markets, Fannie Mae, Freddie Mac, General, Obama Administration, Wall Street | 11 Comments »
Posted by Larry Doyle on March 12th, 2009 6:30 PM |
The world of insurance occupies almost every corner of our lives. Life, home, auto, disability, long term care, personal articles. Rather than addressing what is insured, an easier question may be to ask what isn’t insured.
Given the intricate web of products and accompanying risks, we clearly are not currently dealing with your grandfathers’ insurance companies.
All that said, insurance is a relatively simple business. A policy is underwritten, premiums are collected and invested, and on and on we go. In fact, with major policies incorporating outsized risks, insurers can “lay off” risk with reinsurers, such as Munich Reinsurance, Swiss Reinsurance, and General Reinsurance. One would think this should be a steady and stable, if not quiet, industry. It would be such if companies did not reach for outsized returns through ever greater risks, primarily in the products in which they invested. While The Quiet Company, Northwestern Mutual invests primarily in high quality corporate bonds, entities like AIG trafficked in esoteric CDS. Hartford Financial Services played in the lower credit sectors of the commercial mortgage space, sub-prime mortgages, and junk bonds. (more…)
Tags: AIG, commercial real estate, corporate bonds, Fannie Mae, Freddie Mac, General Reinsurance, Hartford Financial Services, insurance companies, junk bonds, Met Life, Munich Reinsurance, Northwestern Mutual, reinsurers, Risk, sub-prime mortgages, Swiss Reinsurance
Posted in American Consumers, Banking Institutions, Credit Risk, Current Affairs, Economy, Education, Fannie Mae, Freddie Mac, General, Insurance Industry, Wall Street | 4 Comments »
Posted by Larry Doyle on March 9th, 2009 3:35 PM |
A great American and loyal reader (thanks FL) shared a report recently produced by not-for-profits Essential Information and The Consumer Education Foundation. This report, Sold Out: How Wall Street and Washington Betrayed America, has gotten little to no attention in the general media. What a shame. I find of particular interest the fact that a number of the currently discussed regulatory changes are directly addressing the points highlighted in this report. I personally view these proposed regulatory changes as substantiating this report and adding credibility to its effort. For the naysayers in the audience, I would ask you to review the report and reconsider your assessment.
I was struck a month ago by the incriminating statements put forth by Senator Chuck Hagel and CIA head Leon Panetta, which I highlighted on February 16th in Legalized Bribery. Those statements bluntly indict our massive system of lobbying, political fundraising, and the quality of those running for elected office! In light of that article, I am more and more convinced that our elected officials have turned their offices into massive for profit machines at the expense of our public well being.
I commend the authors of this report, Roger Weissman and James Donahue, for taking the time and making the extensive effort to expose the truth. The full report, 231 pages in length, spares no detail. In studying it, I found the information and analysis riveting. Let me try to summarize it for you. (more…)
Tags: Arthur Levitt, California electricity crisis, CFTC, Chris Cox, Chuck Hagel, Citibank, derivatives, Enron, Essential Information, Fannie Mae, FDR, Freddie Mac, Glass-Steagall, greed, James Donahue, Leon Panetta, media complex, Merrill LYnch, off-balance sheet accounting, Paul Volker, Phil Gramm, President Clinton, regulation, Roger Weissman, The Consumer Educational Foundation, Travelers, Wall Street, Washington
Posted in American Consumers, Bank Failure, Banking Institutions, Barack Obama, Business, Christopher Dodd, Chuck Hagel, Chuck Schumer, Congress, Credit Derivative Swaps, Current Affairs, Democratic Party, Economy, Education, Equity Markets, Fannie Mae, FINRA, Freddie Mac, General, Housing Crisis, Insurance Industry, Leon Panetta, Lobbyists, Obama Administration, Rahm Emanuel, Republicans, Reputation, Wall Street | 14 Comments »
Posted by Larry Doyle on March 5th, 2009 6:37 PM |
Some of my favorite movies are The Sting, Rocky, and Papillon. I could watch those films a few times a year and appreciate the plot, character development, and climax.
In that same vein, for newer readers here at Sense on Cents, I want to highlight a piece I wrote on November 12, 2008. I believe this piece is as clear cut an historical explanation as I have seen to highlight the background of the debacle on Wall Street which precipitated this economic disaster. I also find it interesting as to my comments about potential market reaction to an aggressive tax/spend program under President Obama and a Democratic Congress.
I hope you find this article informative and enlightening: (more…)
Tags: AIG, asset-backed market, Bank of America, Bear Stearns, Bernanke, capital, CDS, Centex, China, collateralized mortgage obligation, Countrywide, Fannie Mae, financial quants, Freddie Mac, Hedge Funds, JP Morgan, Lehman Bros, Merrill LYnch, National City Bank, originate to distribute, Paulson, Pulte Homes, rating agencies, Ryland, SEC, Sheila Bair, walll Street
Posted in American Consumers, Auto Industry, Bad Bank, Bailout, Bank of America, Banking Institutions, Barack Obama, Barney Frank, Ben Bernanke, Business, China, Christopher Dodd, Commerce, Congress, Wall Street | 5 Comments »
Posted by Larry Doyle on March 5th, 2009 5:50 AM |
I always maintained that Fannie Mae’s risk management was horrendous. Having engaged this organization in business for many years, it was obvious that their risk was managing them rather than vice versa. While the organization mismanaged risk, their former CEO, Franklin Raines, obviously knew it was prudent to keep expenses down. Franklin Raines, however, knows how to play politics with the best of them and has never let his reputation get in the way of developing marketable relationships.
I wrote about Mr. Raines specifically and Freddie Mac and Fannie Mae in general in a piece last October. I followed that up with a review of Mr. Raines Returns to Washington in mid-December. (more…)
Tags: Angelo Mozilo, Congress, Countrywide, Fannie Mae, Franklin Raines, Freddie Mac, Risk, Wall Street Journal, Washington D.C.
Posted in American Consumers, Barack Obama, Christopher Dodd, Congress, Economy, Fannie Mae, Freddie Mac, Mortgages, Wall Street | 2 Comments »
Posted by Larry Doyle on February 28th, 2009 4:20 PM |
Warren Buffett’s annual letter to shareholders is always a highly anticipated event by market participants. Given the fact that Berkshire is effectively a diversified holdings company, Buffett has a unique perspective into a wide array of businesses. He also has the wisdom of investing over many years and through many challenging markets.
Well, if misery loves company, it has a solid partner in the person of Warren Buffett because 2008 was Berkshire Hathaway’s worst year ever. In reviewing Buffett’s letter allow me to offer some highlights. For those who have an even passing interest in the markets and investing, reading this letter is akin to attending an opera by Pavarotti.
I beg your indulgence as I attempt to be the opening act and provide an overview of the “Oracle of Omaha’s” thoughts on the markets and economy: (more…)
Tags: American Express, Berkshire Hathaway, Economy, Fannie Mae, Freddie Mac, markets, OFHEO, Oracle of Omaha, Pavarotti, U.S. Treasury, Wall Street Journal, Warren Buffet
Posted in Banking Institutions, Business, Commerce, Current Affairs, Deficit, Economic Stimulus, Economy, Employment, Equity Markets, Fannie Mae, Freddie Mac, General, Global Finance, Housing Crisis, Risk, S&P 500, Unemployment, Wall Street | 1 Comment »
Posted by Larry Doyle on February 26th, 2009 10:59 AM |
The government yesterday released the specifics of the Bank Stress Test to be undertaken by the 19 major banking institutions in our country. Those details in conjunction with the testimony provided this week by Treasury Secretary Geithner and Fed chair Bernanke provide a very clear signal as to the government’s approach to our economic problems. In my estimation they are clearly indicating they are going “all in!”
Before we get to the market reactions, allow me to share insights from a highly regarded bank analyst and then comment myself.
Most analysts and economists view the government’s worst case scenarios under the bank test as not much more severe than what many already expect. I’m an optimist by nature but live by the mantra of hope for the best, prepare for the worst. The market will discount the government’s worst case. (more…)
Tags: 1930s, AIG, Bank Stress Test, Ben Bernanke, Chris Whalen, Fannie Mae, Freddie Mac, government spending, New York Times, Office of Comptroller of Currency, Office of Thrift Supervision, taxes, Tim Geithner
Posted in American Consumers, Bailout, Bank Failure, Bank Nationalization, Ben Bernanke, Citigroup, Economy, Equity Markets, Fannie Mae, Freddie Mac, Government funds, Tim Geithner | 3 Comments »
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