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Tracked by: 78 Boarders
Correction: Read Sep 15 as Sep 05.
Btw, as they say that any trader who survives these current markets -- among the most turbulent ever -- will surely be stronger for the experience. :)
Gud luk & happy investing! )...
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by :
BullSheetRules
Based on study of charts, unless someone is convinced that Nifty will go above 4650+, smart investors or traders should take the opportunity to book profits as mentioned by Alert on Sep 15. :)
Let those BS experts first take Nifty above 4650+ to confirm that BIG PLAYers are interested to take Nifty UP! :)
Gud luk & happy investing! :) 
Tracked by: 0 Boarder
More info:
--
Government Takes Over Fannie And Freddie!
DealBreaker Weekend Edition
Posted by John Carney, Sep 07, 2008, 11:39am
The Federal Housing Finance Authority will take over as conservator Fannie Mae and Freddie Mac, the government announced as part of its breathtaking rescue of the two housing giants. Under the plan, the current common stocks shareholders will be nearly wiped out and preferred holders will take a hit, the US government will take up to a 0 billion senior-preferred stock position in each company as needed to maintain a positive net worth, purchase mortgage back securities from the two firms, and lend money to the companies through a special facility run through the Federal Reserve.
Treasury Secretary Hank Paulson was very critical of the structure of the companies as quasi-private institutions, which allowed the shareholders and executives to benefit from profits without bearing the economic risks involved. That situation is thought to have encouraged financial recklessness.
\\`Market discipline is best served when shareholders bear both the risk and the reward of their investment. While conservatorship does not eliminate the common stock, it does place common shareholders last in terms of claims on the assets of the enterprise,\\` he said.
It\\`s pretty odd that the common shares will remain outstanding and continue to trade on the exchanges. How do you value a company run by the government? Paulson\\`s statement that the common shareholders will be last is not very helpful. Common shareholders are always the last claimants on the residual value of a company.
An important turning point in the Fannie and Freddie drama, which dragged on through the summer, seems to have come when government inspectors uncovered continuing accounting problems at Freddie Mac. The New York Times reported yesterday that \\\\...
In reply to:
US Takes over Freddie and Fannie
Posted by : BullSheetRules
Unless YEN DOLLAR ratio improves, there will be RISK AVERSE nature in global markets! Ratio is still close to 106!
Anyway, US government has no option but to bail them out. Otherwise, there would have been total collapse of WALL STREET FINANCIAL market! :)
Btw, as they say that any trader who survives these current markets -- among the most turbulent ever -- will surely be stronger for the experience. :)
Another point:
The Bottom Line
It appears that this potential plan will cost taxpayers tens of billions of dollars. The common and preferred shares of Fannie and Freddie would be reduced to little or nothing, and any losses on mortgages they own or guarantee could be paid by taxpayers. We have been warning about bottom-fishing in these particular names. Monday’s market open does not look good for either stock.
Gud luk & happy investing!
Tracked by: 0 Boarder
RN
YOU HAVE NOT GONE WRONG... you have maintained that there have been mixed signals.. somthing incomprehensible was happening.. i maintain that too... signals HAVE been very mixed.. and confusing too.. somthing wrong somewhere.. or rather somthing ,i, am unable to understand for the moment.. at the moment the only way to trade is being stock specific.. money is there.. but in the right stocks... all the really REALLY beaten down sectors are likely to give a 20% return.. try that as well... reliance power, jyothi streuctures, axis bank., mrpl..
regards
Rittu
\regards...
In reply to:
I better put an end to my predictions
Posted by : radhika_nandlal
Thanks guys for being nice to me... i have gone wrong the whole of this week, so no more predictions. Something is troubling the markets and indications are mixed and confusing. Its better to stay out of prediction games for now. LOL
Tracked by: 0 Boarder
Unless YEN DOLLAR ratio improves, there will be RISK AVERSE nature in global markets! Ratio is still close to 106!
Anyway, US government has no option but to bail them out. Otherwise, there would have been total collapse of WALL STREET FINANCIAL market! :)
Btw, as they say that any trader who survives these current markets -- among the most turbulent ever -- will surely be stronger for the experience. :)
Another point:
The Bottom Line
It appears that this potential plan will cost taxpayers tens of billions of dollars. The common and preferred shares of Fannie and Freddie would be reduced to little or nothing, and any losses on mortgages they own or guarantee could be paid by taxpayers. We have been warning about bottom-fishing in these particular names. Monday’s market open does not look good for either stock.
Gud luk & happy investing!...
In reply to:
US Takes over Freddie and Fannie
Posted by : BullSheetRules
Unless YEN DOLLAR ratio improves, there will be RISK AVERSE nature in global markets! Ratio is still close to 106!
Anyway, US government has no option but to bail them out. Otherwise, there would have been total collapse of WALL STREET FINANCIAL market! :)
Btw, as they say that any trader who survives these current markets -- among the most turbulent ever -- will surely be stronger for the experience. :)
Point to be noted:
--
Big investors in Fannie Mae and Freddie Mac face a brutal Monday. Shares in the mortgage giants, which have already lost 90% of their value over the past year, are likely to plunge anew in the wake of the government's announcement Sunday that it is taking control of the companies and ending the payment of common and preferred dividends.
If the outlook for Freddie shares - which closed Friday at $5.10 but traded as low as $3.50 in the after-hours session when news of the Treasury plan began to circulate - is bleak, one ray of hope comes from the March collapse of Bear Stearns. Those shares were to be sold to J.P. Morgan Chase at $2 apiece in a Fed-brokered rescue of Bear, but the shares traded sharply above that level for a week, until the deal was renegotiated at $10.
--
Gud luk & happy investing!
Is this a victory as the Cong says or a surrender as the Left says? What do you think?
Posted by :
Khem choTracked by: 0 Boarder
Dear Bhavani,
Let us accept the fact that most of the indegenious things we manufactured is a failure or lacks quality. Arjuna main battle tank is a classic example. Mr. Seshan had once voiced his displeasure over large unaccounted money being pumped in the atomic energy sector.
Huge money (running into billions of dollars) have been pumped into our atomic energy programme. How much has the Indian civilians gained. We have to be pragmatic & ask ourselves that, is this expenditure by a poor nation justified. Mr Kalam understands this when he supports the agreement....
In reply to:
Is this a victory as the Cong says or a surrender as the Left says? What do you think?
Posted by : Bhavani27
Well it is both depending on which side you are on.
It is a victory for the international nuclear suppliers, the American ones in particular: they can now do business with and in India: a veritable gold mine considering its dwindling and lopsided coal reserves, the hydel unreliability, oil prices already launched into outer space, and the consequent insatiable thirst for electricity.
It is a surrender of the Indians; they have given up on the thirty five years of asserting that the nuclear program can run with indigenous resources of raw material, manufacturing Industry, know-how and finance without foreign assistance.
SARVAM KRISHNAARPANAM
Bhavani
Tracked by: 0 Boarder
Unless YEN DOLLAR ratio improves, there will be RISK AVERSE nature in global markets! Ratio is still close to 106!
Anyway, US government has no option but to bail them out. Otherwise, there would have been total collapse of WALL STREET FINANCIAL market! :)
Btw, as they say that any trader who survives these current markets -- among the most turbulent ever -- will surely be stronger for the experience. :)
Point to be noted:
--
Big investors in Fannie Mae and Freddie Mac face a brutal Monday. Shares in the mortgage giants, which have already lost 90% of their value over the past year, are likely to plunge anew in the wake of the government's announcement Sunday that it is taking control of the companies and ending the payment of common and preferred dividends.
If the outlook for Freddie shares - which closed Friday at $5.10 but traded as low as $3.50 in the after-hours session when news of the Treasury plan began to circulate - is bleak, one ray of hope comes from the March collapse of Bear Stearns. Those shares were to be sold to J.P. Morgan Chase at $2 apiece in a Fed-brokered rescue of Bear, but the shares traded sharply above that level for a week, until the deal was renegotiated at $10.
--
Gud luk & happy investing!...
In reply to:
US Takes over Freddie and Fannie
Posted by : BullSheetRules
More info
--
Fannie, Freddie: The biggest losers
Investors in Fannie Mae and Freddie Mac face massive losses when trading opens Monday.
By Colin Barr, senior writer
September 7, 2008: 2:03 PM EDT
NEW YORK (Fortune) -- Big investors in Fannie Mae and Freddie Mac face a brutal Monday. Shares in the mortgage giants, which have already lost 90% of their value over the past year, are likely to plunge anew in the wake of the government's announcement Sunday that it is taking control of the companies and ending the payment of common and preferred dividends.
Common and preferred shareholders won't be outright eliminated, as some had feared. But while the shares will continue to trade, it may for investors be a distinction without much of a difference.
Under the 'conservatorship' plan announced Sunday by Treasury Secretary Henry Paulson, common shareholders will also be stripped of their rights to govern the companies.
Given that both Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) have posted billions of dollars in losses during the past year, and that billions more are expected while house prices continue their historic decline, it's not likely that the market will accord much value to shares that give holders no right to select board members or otherwise oversee management.
The list of big losers is long:
Bill Miller, the Legg Mason mutual fund manager, was Freddie Mac's largest shareholder as of July 31, with 12% of the company's stock.
Others Freddie investors include Capital Research & Management of Los Angeles, with a 10% stake as of June 30, and AllianceBernstein and Pzena Investment Management, both of New York, with 6% and 5%.
Holders of Fannie common shares include AllianceBernstein, with 12% of outstanding shares, and Capital Research and Dodge & Cox, of San Francisco, each with 11%, according to data from LionShares.
Treasury said banks should ask their regulators for help if they believe losses on Fannie-Freddie holdings cause their capital to fall below required levels - an admission that the prices of the existing preferred shares are likely to fall even from their already reduced levels.
'The federal banking agencies are assessing the exposures of banks and thrifts to Fannie Mae and Freddie Mac,' Paulson said. 'The agencies encourage depository institutions to contact their primary federal regulator if they believe that losses...are likely to reduce their regulatory capital below 'well capitalized.'
The prospect of a virtual wipeout of existing Fannie and Freddie preferred shares could lead to declines Monday in the shares of regional banks and major insurers that hold the shares. Among the holders of Fannie and Freddie preferred issues are Genworth Financial (GNW, Fortune 500) and MetLife (MET, Fortune 500).
Tough times for Miller
Miller's run of poor results hasn't made him any less aggressive, however. He has owned Freddie shares for some time but has been doubling down on the company as its shares plunged over the past year. Legg Mason owned 15 million shares at the end of 2007, when Freddie stock was fetching $34 a share in the market. He then boosted that figure to 50 million in the first quarter, as shares dropped into the teens in the wake of the collapse of Bear Stearns, and 80 million at July 31, when the price was below $10.
If the outlook for Freddie shares - which closed Friday at $5.10 but traded as low as $3.50 in the after-hours session when news of the Treasury plan began to circulate - is bleak, one ray of hope comes from the March collapse of Bear Stearns. Those shares were to be sold to J.P. Morgan Chase at $2 apiece in a Fed-brokered rescue of Bear, but the shares traded sharply above that level for a week, until the deal was renegotiated at $10.
Tracked by: 0 Boarder
More info
--
Fannie, Freddie: The biggest losers
Investors in Fannie Mae and Freddie Mac face massive losses when trading opens Monday.
By Colin Barr, senior writer
September 7, 2008: 2:03 PM EDT
NEW YORK (Fortune) -- Big investors in Fannie Mae and Freddie Mac face a brutal Monday. Shares in the mortgage giants, which have already lost 90% of their value over the past year, are likely to plunge anew in the wake of the government's announcement Sunday that it is taking control of the companies and ending the payment of common and preferred dividends.
Common and preferred shareholders won't be outright eliminated, as some had feared. But while the shares will continue to trade, it may for investors be a distinction without much of a difference.
Under the 'conservatorship' plan announced Sunday by Treasury Secretary Henry Paulson, common shareholders will also be stripped of their rights to govern the companies.
Given that both Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) have posted billions of dollars in losses during the past year, and that billions more are expected while house prices continue their historic decline, it's not likely that the market will accord much value to shares that give holders no right to select board members or otherwise oversee management.
The list of big losers is long:
Bill Miller, the Legg Mason mutual fund manager, was Freddie Mac's largest shareholder as of July 31, with 12% of the company's stock.
Others Freddie investors include Capital Research & Management of Los Angeles, with a 10% stake as of June 30, and AllianceBernstein and Pzena Investment Management, both of New York, with 6% and 5%.
Holders of Fannie common shares include AllianceBernstein, with 12% of outstanding shares, and Capital Research and Dodge & Cox, of San Francisco, each with 11%, according to data from LionShares.
Treasury said banks should ask their regulators for help if they believe losses on Fannie-Freddie holdings cause their capital to fall below required levels - an admission that the prices of the existing preferred shares are likely to fall even from their already reduced levels.
'The federal banking agencies are assessing the exposures of banks and thrifts to Fannie Mae and Freddie Mac,' Paulson said. 'The agencies encourage depository institutions to contact their primary federal regulator if they believe that losses...are likely to reduce their regulatory capital below 'well capitalized.'
The prospect of a virtual wipeout of existing Fannie and Freddie preferred shares could lead to declines Monday in the shares of regional banks and major insurers that hold the shares. Among the holders of Fannie and Freddie preferred issues are Genworth Financial (GNW, Fortune 500) and MetLife (MET, Fortune 500).
Tough times for Miller
Miller's run of poor results hasn't made him any less aggressive, however. He has owned Freddie shares for some time but has been doubling down on the company as its shares plunged over the past year. Legg Mason owned 15 million shares at the end of 2007, when Freddie stock was fetching $34 a share in the market. He then boosted that figure to 50 million in the first quarter, as shares dropped into the teens in the wake of the collapse of Bear Stearns, and 80 million at July 31, when the price was below $10.
If the outlook for Freddie shares - which closed Friday at $5.10 but traded as low as $3.50 in the after-hours session when news of the Treasury plan began to circulate - is bleak, one ray of hope comes from the March collapse of Bear Stearns. Those shares were to be sold to J.P. Morgan Chase at $2 apiece in a Fed-brokered rescue of Bear, but the shares traded sharply above that level for a week, until the deal was renegotiated at $10.
...
In reply to:
US Takes over Freddie and Fannie
Posted by : BullSheetRules
More info:
--
The Fannie-Freddie bailout: As much as they need
The government has announced its historic bailout of Fannie Mae and Freddie Mac, and it is breathtaking in its scope: the sweeping takeover fires top management at the for-profit companies, bans the companies from lobbying Congress, forces them to shrink in coming years, and in the meantime offers them just about every possible kind of government financial aid under the sun.
Treasury Secretary Henry Paulson (pictured) announced the government will lend Fannie and Freddie money, will purchase their mortgage-backed securities, and will buy up to 0 billion (yes, \\`b\\` billion) in preferred stock to keep the companies afloat. Although the price tag to taxpayers may ultimately be just a fraction of the 0 billion in new stock purchase contracts between the government and the two companies, the bailout is clearly, as The New York Times reported yesterday, \\`among the most expensive rescues ever financed by taxpayers.\\`
The New York Times:
The Treasury Department seized control of Fannie Mae and Freddie Mac, the nation’s giant quasi-public mortgage finance companies, and announced a four-part rescue plan that includes an open-ended guarantee from the Treasury Department to provide as much capital as they need stave off insolvency.
Analysis/Bloviation: Much will be made of the specifics of Paulson\\`s plan to save Fannie and Freddie -- putting them into a conservatorship, under their new regulator, rather than receivership. True indeed, Hank Paulson is a clever investment banker; it\\`s quite possible he has put together the best possible rescue plan given the various risks. And because shareholders will suffer, many in Washington will argue -- as U.S. Rep. Barney Frank already has -- that this is \\`not a bailout.\\` Bull. It is a massive bailout, a historic lifeline to two failing for-profit companies that bullied Congress for decades, had their way with generations of politicians, and routinely handed out million-dollar paychecks to executives who were running these giants into the ground.
The stakes go far beyond Fannie and Freddie -- Paulson is trying to steady the entire financial system by demonstrating that there is a lifeguard on duty, and that the federal government is not going to allow huge, chaotic financial failures. It seems likely his life-saving skills -- and the limits of taxpayer generosity -- will be tested again.
--Peter Viles
Tracked by: 4 Boarders
Yes i am very serious read my message carefully i have written after every five years our index doubles. And nifty will touch 10000 after five years i.e in 2012. Talking about step by step then the major resistance of this year are 4650, 5000, 5300, 5700 nifty will not move beyond 5700 in 2008....
In reply to:
WILL NIFTY HIT 9999 & SENSEX TOUCH 34997
Posted by : vam_aru
Are you serious by saying NIFTY will touch 10000 ?, Take one step at a time, Let the markets close above 5000 and holding for one or two month, then we can make judgements.
Tracked by: 0 Boarder
More info:
--
The Fannie-Freddie bailout: As much as they need
The government has announced its historic bailout of Fannie Mae and Freddie Mac, and it is breathtaking in its scope: the sweeping takeover fires top management at the for-profit companies, bans the companies from lobbying Congress, forces them to shrink in coming years, and in the meantime offers them just about every possible kind of government financial aid under the sun.
Treasury Secretary Henry Paulson (pictured) announced the government will lend Fannie and Freddie money, will purchase their mortgage-backed securities, and will buy up to 0 billion (yes, \\`b\\` billion) in preferred stock to keep the companies afloat. Although the price tag to taxpayers may ultimately be just a fraction of the 0 billion in new stock purchase contracts between the government and the two companies, the bailout is clearly, as The New York Times reported yesterday, \\`among the most expensive rescues ever financed by taxpayers.\\`
The New York Times:
The Treasury Department seized control of Fannie Mae and Freddie Mac, the nation’s giant quasi-public mortgage finance companies, and announced a four-part rescue plan that includes an open-ended guarantee from the Treasury Department to provide as much capital as they need stave off insolvency.
Analysis/Bloviation: Much will be made of the specifics of Paulson\\`s plan to save Fannie and Freddie -- putting them into a conservatorship, under their new regulator, rather than receivership. True indeed, Hank Paulson is a clever investment banker; it\\`s quite possible he has put together the best possible rescue plan given the various risks. And because shareholders will suffer, many in Washington will argue -- as U.S. Rep. Barney Frank already has -- that this is \\`not a bailout.\\` Bull. It is a massive bailout, a historic lifeline to two failing for-profit companies that bullied Congress for decades, had their way with generations of politicians, and routinely handed out million-dollar paychecks to executives who were running these giants into the ground.
The stakes go far beyond Fannie and Freddie -- Paulson is trying to steady the entire financial system by demonstrating that there is a lifeguard on duty, and that the federal government is not going to allow huge, chaotic financial failures. It seems likely his life-saving skills -- and the limits of taxpayer generosity -- will be tested again.
--Peter Viles...
In reply to:
US Takes over Freddie and Fannie
Posted by : BullSheetRules
Unless YEN DOLLAR ratio improves, there will be RISK AVERSE nature in global markets! Ratio is still close to 106!
Anyway, US government has no option but to bail them out. Otherwise, there would have been total collapse of WALL STREET FINANCIAL market! :)
Btw, as they say that any trader who survives these current markets -- among the most turbulent ever -- will surely be stronger for the experience. :)
--Part 2
Global Interest
The Treasury noted that Fannie and Freddie securities are held by central banks and 'investors around the world.''
Lockhart added that interest and principal payments will continue to be made on the companies' subordinated debt.
The Treasury will hire independent asset managers to purchase and run the portfolio of mortgage-backed securities it will buy. The program goes beyond just helping Fannie and Freddie, as it aims 'to broaden access to mortgage funding for current and prospective homeowners,'' according to the Treasury.
'There is no reason to expect taxpayer losses from this program, and it could produce gains,'' the department said.
Lockhart said today's action was prompted by a judgment that the companies 'cannot continue to operate safely and soundly and fulfill their critical public mission without significant action to address our concerns.''
Paulson's decision, taken after consulting with Federal Reserve Chairman Ben S. Bernanke, followed a review that found Washington-based Fannie and McLean, Virginia-based Freddie used accounting methods that inflated their capital, according to people with knowledge of the decision.
Morgan Stanley Role
Paulson, 62, hired Morgan Stanley a month ago to probe the companies' finances. The investment bank concluded that the accounting, while legal, enabled Freddie, and to a lesser extent Fannie, to overstate the value of their reserves, according to the people who declined to be identified because the findings were confidential.
The FHFA will aim to 'preserve and conserve'' the companies' assets and property and put them 'in a sound and solvent condition,'' according to a fact sheet distributed by the Treasury. There is 'no exact time frame'' for when the conservatorship will end, the statement said.
Fannie and Freddie own or guarantee almost half of the $12 trillion in U.S. home loans and the government had been leaning on the companies to help pull the economy out of the housing crisis.
Shares Plunged
Concern over the companies' capital pushed their borrowing costs to record levels over U.S. Treasuries, sent their common and preferred stocks tumbling and boosted mortgage rates. Fannie is down about 66 percent in New York Stock Exchange trading since the end of June. Freddie has fallen about 69 percent.
The Treasury briefed Democratic presidential candidate Barack Obama yesterday and has contacted Republican contender John McCain's staff. Officials also discussed the plans with House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid, Senate Banking Committee Chairman Christopher Dodd and House Financial Services Committee Chairman Barney Frank.
Fannie was created by the government in 1938 as part of President Franklin D. Roosevelt's New Deal. Freddie was chartered in 1970 to compete with Fannie.
As losses on the mortgages grew late last year, the companies recorded $14.9 billion in combined net losses, eating into their capital. Fannie raised $14.4 billion since November and Freddie sold $6 billion of preferred securities. Plans for a $5.5 billion sale were delayed as the company's fortunes sank.
Capital Levels
Fannie had $47 billion of capital as of June 30, according to company filings. The company is required by its regulator to hold $37.5 billion. Freddie's capital stood at $37.1 billion, compared with a requirement of $34.5 billion, filings show.
Bernanke participated in the meetings because the central bank was given a consultative role in overseeing Fannie's and Freddie's capital under legislation approved in July.
Tracked by: 0 Boarder
Unless YEN DOLLAR ratio improves, there will be RISK AVERSE nature in global markets! Ratio is still close to 106!
Anyway, US government has no option but to bail them out. Otherwise, there would have been total collapse of WALL STREET FINANCIAL market! :)
Btw, as they say that any trader who survives these current markets -- among the most turbulent ever -- will surely be stronger for the experience. :)
--Part 2
Global Interest
The Treasury noted that Fannie and Freddie securities are held by central banks and 'investors around the world.''
Lockhart added that interest and principal payments will continue to be made on the companies' subordinated debt.
The Treasury will hire independent asset managers to purchase and run the portfolio of mortgage-backed securities it will buy. The program goes beyond just helping Fannie and Freddie, as it aims 'to broaden access to mortgage funding for current and prospective homeowners,'' according to the Treasury.
'There is no reason to expect taxpayer losses from this program, and it could produce gains,'' the department said.
Lockhart said today's action was prompted by a judgment that the companies 'cannot continue to operate safely and soundly and fulfill their critical public mission without significant action to address our concerns.''
Paulson's decision, taken after consulting with Federal Reserve Chairman Ben S. Bernanke, followed a review that found Washington-based Fannie and McLean, Virginia-based Freddie used accounting methods that inflated their capital, according to people with knowledge of the decision.
Morgan Stanley Role
Paulson, 62, hired Morgan Stanley a month ago to probe the companies' finances. The investment bank concluded that the accounting, while legal, enabled Freddie, and to a lesser extent Fannie, to overstate the value of their reserves, according to the people who declined to be identified because the findings were confidential.
The FHFA will aim to 'preserve and conserve'' the companies' assets and property and put them 'in a sound and solvent condition,'' according to a fact sheet distributed by the Treasury. There is 'no exact time frame'' for when the conservatorship will end, the statement said.
Fannie and Freddie own or guarantee almost half of the $12 trillion in U.S. home loans and the government had been leaning on the companies to help pull the economy out of the housing crisis.
Shares Plunged
Concern over the companies' capital pushed their borrowing costs to record levels over U.S. Treasuries, sent their common and preferred stocks tumbling and boosted mortgage rates. Fannie is down about 66 percent in New York Stock Exchange trading since the end of June. Freddie has fallen about 69 percent.
The Treasury briefed Democratic presidential candidate Barack Obama yesterday and has contacted Republican contender John McCain's staff. Officials also discussed the plans with House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid, Senate Banking Committee Chairman Christopher Dodd and House Financial Services Committee Chairman Barney Frank.
Fannie was created by the government in 1938 as part of President Franklin D. Roosevelt's New Deal. Freddie was chartered in 1970 to compete with Fannie.
As losses on the mortgages grew late last year, the companies recorded $14.9 billion in combined net losses, eating into their capital. Fannie raised $14.4 billion since November and Freddie sold $6 billion of preferred securities. Plans for a $5.5 billion sale were delayed as the company's fortunes sank.
Capital Levels
Fannie had $47 billion of capital as of June 30, according to company filings. The company is required by its regulator to hold $37.5 billion. Freddie's capital stood at $37.1 billion, compared with a requirement of $34.5 billion, filings show.
Bernanke participated in the meetings because the central bank was given a consultative role in overseeing Fannie's and Freddie's capital under legislation approved in July....
In reply to:
US Takes over Freddie and Fannie
Posted by : BullSheetRules
Unless YEN DOLLAR ratio improves, there will be RISK AVERSE nature in global markets! Ratio is still close to 106!
Anyway, US government has no option but to bail them out. Otherwise, there would have been total collapse of WALL STREET FINANCIAL market! :)
Btw, as they say that any trader who survives these current markets -- among the most turbulent ever -- will surely be stronger for the experience. :)
--
Paulson Engineers U.S. Takeover of Fannie, Freddie (Update2)
By Rebecca Christie and Dawn Kopecki
More Photos/Details
Sept. 7 (Bloomberg) -- The U.S. government seized control of Fannie Mae and Freddie Mac after the biggest surge in mortgage defaults in at least three decades threatened to topple the companies making up almost half the U.S. home-loan market.
\\`It is necessary to take action,\\`\\` Treasury Secretary Henry Paulson, who engineered the takeover along with Federal Housing Finance Agency Director James Lockhart, said in Washington today. \\`Our economy and our markets will not recover until the bulk of this housing correction is behind us. Fannie Mae and Freddie Mac are critical to turning the corner.\\`\\`
The FHFA will take over Fannie and Freddie under a so-called conservatorship, replacing their chief executives and eliminating their dividends. The Treasury will purchase up to 0 billion of senior-preferred stock in each company as needed to maintain a positive net worth. It will also provide secured short-term funding to Fannie, Freddie and 12 federal home-loan banks, and purchase mortgage-backed debt in the open market.
The takeover of Fannie and Freddie is the biggest step yet in officials\\` efforts to grapple with a yearlong credit crisis that has caused more than 0 billion of losses and writedowns. The government is taking an increasing role in financial markets, after the Federal Reserve six months ago provided billion of financing to prevent Bear Stearns & Cos.\\`s collapse.
Treasury Gets Stock
Under the plan, the Treasury will receive billion of senior preferred stock in coming days, with warrants representing ownership stakes of 79.9 percent of Fannie and Freddie. The government will receive annual interest of 10 percent on the initial investments.
As a condition for the assistance, Fannie and Freddie will have to reduce their holdings of mortgages and securities backed by home loans. The portfolios \\`shall not exceed 0 billion as of December 31, 2009, and shall decline by 10 percent per year until it reaches 0 billion,\\`\\` the Treasury said.
\\`The government wasn\\`t going to allow them to muddle through this mess,\\`\\` said Paul Miller, an analyst at Friedman Billings Ramsey & Co. in Arlington, Virginia. \\`No way were they going to be able to do that because the market was going to freeze up.\\`\\`
New CEOs
Herbert Allison, 65, former chief executive officer of TIAA- Cref, will take over as Fannie\\`s new CEO. David Moffett, 56, who was vice chairman of US Bancorp, will head Freddie, Lockhart said. They will work with existing management, he added.
Fannie CEO Daniel Mudd, 50, and Freddie CEO Richard Syron, 64, will serve in a transition period as consultants.
While common stockholders of Fannie and Freddie won\\`t be eliminated under the conservatorships, they will be last in line for any claims, Paulson said. Preferred shareholders will be second in absorbing losses, he said.
Banks and insurance companies have typically purchased the two companies\\` preferred shares. The Federal Reserve and three other bank regulators said that they will work to \\`develop capital restoration plans\\`\\` with the \\`limited number\\`\\` of smaller institutions that hold Fannie and Freddie shares as a significant share of their capital.
By ensuring that Fannie and Freddie maintain positive net worth, the Treasury will provide \\`additional security\\`\\` to the owners of Fannie and Freddie bonds and \\`additional confidence\\`\\` for the holders of their mortgage-backed securities, it said.
--
Gud luk & happy investing!
Tracked by: 0 Boarder
Unless YEN DOLLAR ratio improves, there will be RISK AVERSE nature in global markets! Ratio is still close to 106!
Anyway, US government has no option but to bail them out. Otherwise, there would have been total collapse of WALL STREET FINANCIAL market! :)
Btw, as they say that any trader who survives these current markets -- among the most turbulent ever -- will surely be stronger for the experience. :)
--
Paulson Engineers U.S. Takeover of Fannie, Freddie (Update2)
By Rebecca Christie and Dawn Kopecki
More Photos/Details
Sept. 7 (Bloomberg) -- The U.S. government seized control of Fannie Mae and Freddie Mac after the biggest surge in mortgage defaults in at least three decades threatened to topple the companies making up almost half the U.S. home-loan market.
\\`It is necessary to take action,\\`\\` Treasury Secretary Henry Paulson, who engineered the takeover along with Federal Housing Finance Agency Director James Lockhart, said in Washington today. \\`Our economy and our markets will not recover until the bulk of this housing correction is behind us. Fannie Mae and Freddie Mac are critical to turning the corner.\\`\\`
The FHFA will take over Fannie and Freddie under a so-called conservatorship, replacing their chief executives and eliminating their dividends. The Treasury will purchase up to 0 billion of senior-preferred stock in each company as needed to maintain a positive net worth. It will also provide secured short-term funding to Fannie, Freddie and 12 federal home-loan banks, and purchase mortgage-backed debt in the open market.
The takeover of Fannie and Freddie is the biggest step yet in officials\\` efforts to grapple with a yearlong credit crisis that has caused more than 0 billion of losses and writedowns. The government is taking an increasing role in financial markets, after the Federal Reserve six months ago provided billion of financing to prevent Bear Stearns & Cos.\\`s collapse.
Treasury Gets Stock
Under the plan, the Treasury will receive billion of senior preferred stock in coming days, with warrants representing ownership stakes of 79.9 percent of Fannie and Freddie. The government will receive annual interest of 10 percent on the initial investments.
As a condition for the assistance, Fannie and Freddie will have to reduce their holdings of mortgages and securities backed by home loans. The portfolios \\`shall not exceed 0 billion as of December 31, 2009, and shall decline by 10 percent per year until it reaches 0 billion,\\`\\` the Treasury said.
\\`The government wasn\\`t going to allow them to muddle through this mess,\\`\\` said Paul Miller, an analyst at Friedman Billings Ramsey & Co. in Arlington, Virginia. \\`No way were they going to be able to do that because the market was going to freeze up.\\`\\`
New CEOs
Herbert Allison, 65, former chief executive officer of TIAA- Cref, will take over as Fannie\\`s new CEO. David Moffett, 56, who was vice chairman of US Bancorp, will head Freddie, Lockhart said. They will work with existing management, he added.
Fannie CEO Daniel Mudd, 50, and Freddie CEO Richard Syron, 64, will serve in a transition period as consultants.
While common stockholders of Fannie and Freddie won\\`t be eliminated under the conservatorships, they will be last in line for any claims, Paulson said. Preferred shareholders will be second in absorbing losses, he said.
Banks and insurance companies have typically purchased the two companies\\` preferred shares. The Federal Reserve and three other bank regulators said that they will work to \\`develop capital restoration plans\\`\\` with the \\`limited number\\`\\` of smaller institutions that hold Fannie and Freddie shares as a significant share of their capital.
By ensuring that Fannie and Freddie maintain positive net worth, the Treasury will provide \\`additional security\\`\\` to the owners of Fannie and Freddie bonds and \\`additional confidence\\`\\` for the holders of their mortgage-backed securities, it said.
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Gud luk & happy investing!
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In reply to:
US Takes over Freddie and Fannie
Posted by : vam_aru
Tomorrow along with ASIA , EUROPE Markets rising , coupled with this move DOW will also rise. so our markets will move on tuesday also.
Tracked by: 0 Boarder
Rishi Agarwal, MD, Austral Coke expect Rs 500 crore revenues for FY09. Further hel said that Coke is a global shortage and is undergoing a boom world wide. He sees no revenues from Textiles in FY09 but sees major contribution from Coke....
Tracked by: 0 Boarder
It depends on the opening, once opened wait for 10 miuntes to let it cool, as the market orders get completed , once the initial euphoria over try to get the in the money call ( ITM ),where the premium might be lower....
In reply to:
How to write PUTS to Purchase stocks
Posted by : mohanji
Thank you so much Aru! for the book.And thanks for suggestion. Which strike level will be good for taking calls?Regards
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Thank you so much Aru! for the book.And thanks for suggestion. Which strike level will be good for taking calls?Regards...
In reply to:
How to write PUTS to Purchase stocks
Posted by : vam_aru
Hi,
I would suggest don't add the 4200 PUTS now, if possible get out but since you are not going to get back much premium ( as everyone knows it's going up so no body would want to sell it ), leave that one ...and let the others ride...
I am looking to add some calls in the morning...let's see..I have sent the book by email.
Tracked by: 3 Boarders
NSE is sure losing some revenue because of this, but market analyst feels SGX nifty provides a good price discovery for the nifty....
In reply to:
2nd September
Posted by : mohanji
Thanks Aru! now i recall that last I heard about it was that FII hv started diverting funds from Indian nifty to singapore nifty.Right.Regards
