Fannie & Freddie are insolvent - Bill Poole (Fed)

Discussion in 'Trading' started by bond tr4der, Jul 10, 2008.

  1. both stocks will be down 50% in the morning. Neither can raise cash anymore via bond financing. 20 year Tripe A rated FRE failed yesterday. That's the first time FRE or FNM ever had a bond issue fail. at least recently they were getting BBB yields. Only other option is secondary pulic offerings galore.

    Bill Poole came out late today saying they are insolvent, even under phoney accounting rules.

    Only US Govt bailout can prevent bankruptcy.

    Maybe Ben & Hank will explain tomorrow infront of senate banking committee: the emergency need for nationalization of FRE FMN

    Black Thursday!
  2. Link?

    The market already knew about the funding problem this morning.
  3. Well, Jim Rogers was right again. He said a few years ago that FNM's financial statements made no sense and he was shorting it. As I recall he expected it to go to the teens at a time when FNM was in the 50-60 range.

    FNM and FRE will not go bust. If they did, the question wouldn't be whether or not we are in a recession. It would be whether or not we're in a depression. They are simply too big to fail. This doesn't mean stockholders won't get hurt. New stock issuances would really dilute share value.