Comments on: Creditors sometimes do get a vote http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/ Sat, 21 Nov 2009 16:40:10 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Cedric Regula http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111973 Cedric Regula Fri, 29 Aug 2008 04:21:39 +0000 http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111973 Not quite so simple. Congress and the Admin gave the Tresurury carte blanc authority to fix any problem they see before sept 30. So we may see the national debt increased by another $225B. I hate it when that happens. Not quite so simple.

Congress and the Admin gave the Tresurury carte blanc authority to fix any problem they see before sept 30.

So we may see the national debt increased by another $225B.

I hate it when that happens.

]]> By: jo6pac http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111967 jo6pac Fri, 29 Aug 2008 01:53:16 +0000 http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111967 This is really very simple, China and everyone has known for years that the paper was worthless but until the O Games were in play there is no longer a reason to help the shell game continue. jo6pac The race to the bottom continues. This is really very simple, China and everyone has known for years that the paper was worthless but until the O Games were in play there is no longer a reason to help the shell game continue.
jo6pac
The race to the bottom continues.

]]> By: tl http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111947 tl Thu, 28 Aug 2008 10:08:28 +0000 http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111947 "Ginnie Maes already are backed by the 'full faith and credit of the United States'" So you're calling for a direct bailout from the government. “Ginnie Maes already are backed by the ‘full faith and credit of the United States’”

So you’re calling for a direct bailout from the government.

]]> By: Cedric Regula http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111946 Cedric Regula Wed, 27 Aug 2008 21:21:41 +0000 http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111946 At the risk of beating this subject to death, just to find out our fact finding is incomplete, I just saw a very recent headline in RGE Monitor stating that Fannie needs to roll over about $225B in bonds by the end of the quarter. I think they should at least be given small country status by the IMF. Possibly even G10. So I guess the september 30 deadline is more of a problem than we thought. At the risk of beating this subject to death, just to find out our fact finding is incomplete, I just saw a very recent headline in RGE Monitor stating that Fannie needs to roll over about $225B in bonds by the end of the quarter. I think they should at least be given small country status by the IMF. Possibly even G10. So I guess the september 30 deadline is more of a problem than we thought.

]]> By: Twofish http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111937 Twofish Wed, 27 Aug 2008 17:38:17 +0000 http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111937 Ginnie Maes already are backed by the "full faith and credit of the United States". Ginnie Maes already are backed by the “full faith and credit of the United States”.

]]> By: tl http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111931 tl Wed, 27 Aug 2008 06:24:58 +0000 http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111931 "True, but that can be done without bailing out holders of agency bonds. You could have the government guarantee MBS’s and then finance things through the Ginnie Mae program." Would Ginnie Mae debt get an explicit government guarantee ? If not, what special financing terms would it have (especially seeing it has more leverage than passthroughs) ? If it doesn't have special financing terms, how does it stay solvent ? “True, but that can be done without bailing out holders of agency bonds. You could have the government guarantee MBS’s and then finance things through the Ginnie Mae program.”

Would Ginnie Mae debt get an explicit government guarantee ? If not, what special financing terms would it have (especially seeing it has more leverage than passthroughs) ? If it doesn’t have special financing terms, how does it stay solvent ?

]]> By: Cedric Regula http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111929 Cedric Regula Wed, 27 Aug 2008 04:57:33 +0000 http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111929 Agreed, 2fish Agreed, 2fish

]]> By: Twofish http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111928 Twofish Wed, 27 Aug 2008 04:49:58 +0000 http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111928 The one bit of good news is that it is a slow motion train wreck rather than a fast train wreck. In the case of Bear-Stearns things were falling apart hour by hour, whereas in this situation, you do have the luxury of being able to think about what to do. It's basically the difference between someone with a heart attack and someone with emphysema. The one bit of good news is that it is a slow motion train wreck rather than a fast train wreck. In the case of Bear-Stearns things were falling apart hour by hour, whereas in this situation, you do have the luxury of being able to think about what to do. It’s basically the difference between someone with a heart attack and someone with emphysema.

]]> By: Twofish http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111927 Twofish Wed, 27 Aug 2008 04:43:32 +0000 http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111927 pseudo: Can you back this up? AFAIK, the Agencies neither bought nor guaranteed subprimes. Take a look at Table 26 from Fannie's report and Table 22 from Freddie's http://www.freddiemac.com/investors/ar/pdf/2007annualrpt.pdf http://www.fanniemae.com/ir/pdf/annualreport/2007/2007_annual_report.pdf The problem is that you just don't make that much money guaranteeing prime mortgages. It's very boring business. You get some fees for guarantees, but they are low because people don't expect prime mortgages to default. Around 2002, someone got the bright idea that what they would do is to use the GSE's borrowing ability to borrowing money at low rates and then buy high interest mortgages. They made huge amounts of money for a few years before those mortgages went bad. So what basically happened was that low-interest good mortgages got packaged and sold off. High-interest mortgages the GSE's kept. Now those high interest mortgages are going bad. pseudo: Can you back this up? AFAIK, the Agencies neither bought nor guaranteed subprimes.

Take a look at Table 26 from Fannie’s report and Table 22 from Freddie’s

http://www.freddiemac.com/investors/ar/pdf/2007annualrpt.pdf

http://www.fanniemae.com/ir/pdf/annualreport/2007/2007_annual_report.pdf

The problem is that you just don’t make that much money guaranteeing prime mortgages. It’s very boring business. You get some fees for guarantees, but they are low because people don’t expect prime mortgages to default.

Around 2002, someone got the bright idea that what they would do is to use the GSE’s borrowing ability to borrowing money at low rates and then buy high interest mortgages. They made huge amounts of money for a few years before those mortgages went bad.

So what basically happened was that low-interest good mortgages got packaged and sold off. High-interest mortgages the GSE’s kept. Now those high interest mortgages are going bad.

]]> By: Cedric Regula http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111925 Cedric Regula Tue, 26 Aug 2008 21:49:07 +0000 http://blogs.cfr.org/setser/2008/08/25/creditors-sometimes-do-get-a-vote/#comment-111925 You're describing the old F&F. But I've read some news reports stating they did buy up subprime stuff for their internal portfolio. Also heard that discussed on the Mr. K for Kapitalism show. You’re describing the old F&F.

But I’ve read some news reports stating they did buy up subprime stuff for their internal portfolio.

Also heard that discussed on the Mr. K for Kapitalism show.

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