News conference at 11am: http://www.reuters.com/article/marketsNews/idINN0735496920080907?rpc=44 WASHINGTON, Sept 7 (Reuters) - U.S. Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart will hold a news conference at 11 a.m. (1500 GMT) on Sunday, the Treasury Department said. The officials are expected to announce plans for a federal takeover of mortgage finance companies Fannie Mae (FRE.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz). FHFA regulates the two companies, the largest sources of U.S. home mortgage finance. The move to take control of the two companies, which could amount to the largest financial bailout in U.S. history, is a bid to ward off further damage to a housing market in its deepest downturn since the Great Depression. Rep. Barney Frank, chairman of the U.S. House of Representatives Financial Services Committee, told The Washington Post the federal government was expected to control the companies for at least a year as it considers whether they should remain government-run, or be restructured. Fannie Mae and Freddie Mac own or guarantee almost half of the country's $12 trillion in outstanding home mortgage debt. They have suffered combined losses of nearly $14 billion in the past four quarters. In an emergency move in July, the U.S. Congress gave the Treasury the authority to extend an undetermined amount of credit to the companies or take a stake in them if they ran into trouble.
Paulson PPT team at work again. It seems any week/end that the Dow looks to be approaching 11k that Paulson pulls a magic trick from his hat. Anyway reading the following NYT article.It notes that FRE and FNM have in recent months passed new loss accounting on mortgages from 90 days past due to 730 days past due. If I remember correctly a lot of other banks have also pushed out the past due loss accounting, so we may have other bank lenders who have understated their losses also. http://www.nytimes.com/2008/09/07/business/07fannie.html?pagewanted=2&ref=business "For years, both companies have effectively recognized losses whenever payments on a loan are 90 days past due. But, in recent months, the companies said they would wait until payments were two years late. As a result, tens of thousands of loans have not been marked down in value."