Paulson wants to nationalize FNM or FRE for $15 billion

Discussion in 'Wall St. News' started by The Kin, Jul 12, 2008.

  1. TYtrader

    TYtrader

    That might be a good solution. WhatsTrading.com posted an interesting summary (below) about what happened last week. The spike in vols in a number of other financial names seems to suggest that the market is very worried about possible spillover from the problems with FNM and FRE.


    The big story in the options market this week was the dramatic spike in implied volatility in many of the financial names, including huge gaps in Fannie (FNM) and Freddie (FRE) late in the week. The problems surfaced early in the week on reports that a new accounting rule (FASB 140 Rule) could force FNM and FRE to raise capital by bringing off balance sheet assets back to the balance sheet. The selling resumed on Wednesday on reports Fannie had paid record amounts in a sale of two-year notes The next day found no reprieve after the Wall Street Journal reported that government regulators were in talks about what to do if Fannie and Freddie faltered. Then Federal Reserve President Poole added more fuel to the fire by saying the two companies could be “insolvent”. Friday, shares of Freddie and Fannie sank early on talk government officials are mulling the possibility of taking over one or both entities. If so, it could put them in a conservatorship, which would probably result in the equities being worth very little or nothing Yikes! However, some of the fears subsided when Treasury Secretary Paulson came out with soothing comments about a bailout not being imminent. Federal Reserve Chairman Ben Bernanke helped some as well, when he said FNM and FRE might be able to access the Fed’s discount window. In the end, FNM was trading at $10.25 and well off session lows of $6.68 and FRE bounced off a low of $3.89 to close at $7.75. Yet, both saw significant losses on the week and implied volatility in a number of financials is at an extreme. FNM July 10 puts and the FRE July 7.5 puts have implied volatility in excess of 400 percent. Big implied volatility gains were also seen in Lehman (LEH), Wachovia (WB), Sovereign (SOV), CIT Group (CIT), Annaly Mortgage (NLY), and Merrill (MER).
     
    #11     Jul 12, 2008
  2. true. Maybe he's buying 51% of the stock so he can approve a takeover by the treasury at $0 per share. :p

    I dunno. Too much information the last few days.
     
    #12     Jul 12, 2008
  3. Musta been a 'count-down to six o'clock' situtaion all week at the FDIC.

    Only the beginning...the Indymac situation, despite that it is 'being underreported', and 'downplayed', will ultimately spread to other banking institutions, likely at a quickening pace.


    They have just taken out the large depositors at 50 cents on the dollar...

    If BB ain't crappin his drawers yet, he outta be.

    As a nation, we are 'whistlin' past the graveyard'. This is going to get ugly.

    Factor in inflation, national debt, balance of trade (negative and getting larger), etc, etc.

    Looks like it's 'mattress-time' coming up.

    Oh course, even that won't help much, with the devaluing dollar, and inflation. Witness the depositors of Indymac, they just recieved the equivalent of 'scrip', (perhaps better named 'scrap', or even crap, for short), in exchange for the deposits they had.

    With a snow-balling effect in store most likely, more bank runs, that is, looks like it may be a 'race to the bottom' for the dollar, as people yank out the remains of their dough, and whoever is left gets increasingly derceased percentages of 'credit-vouchers' on what they believed what 'their dough', (as the Fed runs outta money, they will be required to offer less and less for depositors, further pressuring the dollar).

    Of course, this may only be fully realized after a little lag effect, as it begins to quicken in pace, which may take several days or more, as the Fed and SecTreas do their darndest to quell the current situation.

    Unfortunately, as a nation, we are as bankrupt as most all these thrifts, lenders, etc. The only difference being the full manifestation has yet to occur.

    http://youtube.com/watch?v=MJJN9qwhkkE&feature=related
     
    #13     Jul 12, 2008
  4. For one Fed can print as much cash as they need so what happended in the 1920's will not happen again and you will not have a bank run. I believe the real problem is much worse. Since govt can print money when ever they choose they will pay you back with crackers aka worthless money.
     
    #14     Jul 12, 2008
  5. qUSA.PK
     
    #15     Jul 12, 2008
  6. LoL!
     
    #16     Jul 12, 2008
  7. What's insanity is that we lent $ to toothless peasants to buy grossly overpriced houses from sharpshooting speculators and real estate pimps.

    What's insanity is that Mozillo is not behind bars or worse,
     
    #17     Jul 12, 2008
  8. The turning point for USA was 9-11. The message was clear: America is vulnerable in more ways than one, and the heretofore standard of living of its citizens (and illegal immigrants) had reached a peak.

    Cronic debt, easy money, and speculation combined with uncontrollable international events (rising commodity prices) has brought the empire down a few notches. The worst is yet to come as these types of catastrophic events always end badly.
     
    #18     Jul 12, 2008
  9. ammo

    ammo

    i'm limit long bicycles
     
    #19     Jul 13, 2008
  10. #20     Jul 13, 2008