Thread: Fannie Mae, Freddie Rescue a `Disaster,' Rogers Says

Fannie Mae, Freddie Rescue a `Disaster,' Rogers Says (Update1)

By Carol Massar and Eric Martin

July 14 (Bloomberg) -- The U.S. Treasury Department's plan to shore up Fannie Mae and Freddie Mac is an ``unmitigated disaster'' and the largest U.S. mortgage lenders are ``basically insolvent,'' according to investor Jim Rogers.

Taxpayers will be saddled with debt if Congress approves U.S. Treasury Secretary Henry Paulson's request for the authority to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac, Rogers said in a Bloomberg Television interview. The chairman of Rogers Holdings, who in 2006 correctly predicted oil would reach $100 a barrel and gold $1,000 an ounce, also said the commodities bull market has a ``long way to go.''

Fannie Mae and Freddie Mac each surged more than 20 percent in pre-market trading today after Paulson moved to stem a collapse in confidence in the two companies that purchase or finance almost half of the $12 trillion in U.S. home loans.

``These companies were going to go bankrupt if they hadn't stepped in to do something, and they should've gone bankrupt,'' Rogers, 65, said from Singapore.

Freddie Mac rose $1.75 to $9.50 as of 8:30 a.m. in New York, while Fannie Mae added $2.30 to $12.55. Paulson's proposal, which the Treasury anticipates will be incorporated into an existing congressional bill and approved this week, signals a shift toward an explicit guarantee of Fannie Mae and Freddie Mac debt.

The Federal Reserve separately authorized the firms to borrow directly from the central bank.

Last Week's Slump

Washington-based Fannie Mae slid 45 percent last week, while McLean, Virginia-based Freddie Mac sank 47 percent on concern they may require a bailout that would wipe out shareholders.

Rogers said he had not covered his so-called short positions in Fannie Mae. Short sellers borrow stock and then sell it in an effort to profit by repurchasing the securities later at a lower price and returning them to the holder.

The U.S. economy is in a recession, possibly the worst since World War II, Rogers said. He advised buying agricultural commodities because the bull market in raw materials has ``a long way to go.''

Rogers, a former partner of hedge fund manager George Soros, predicted the start of the commodities rally in 1999.

To contact the reporters on this story: Carol Massar in New York at cmassar@bloomberg.net; Eric Martin in New York at emartin21@bloomberg.net.

Last Updated: July 14, 2008 08:47 EDT
http://www.bloomberg.com/apps/news?pid= ... 8&refer=us

In no way should American taxpayers have to pay to sustain these companies!

W

I spent some time checking out foreclosure lists in and around L.A. County and San Beranrdino County. It was NO surprise that at least 80% of the foreclosed properties had been owned by persons with an hispanic last name...thousands of them!

Bush kept pushing the American dream...home ownership for every immigrant! The commercials all featured hispanic families standing in front of their newly purchased dream home...their $500K CA dream home. But Pedro and Maria only had a combined income of $30,000! No problemo...they got the loan in five minutes...no down, no docs, stated income...and, presto...the American dream. But no one bothered to do the simple 6th grade math to show that they could never afford to pay for it!

Bush, Greenspan, Paulson, Dodd, Schumer, and all the Fed regulators belong in prison, along with the lenders and morgage brokers who co-conspired! Why stop with Enron, WorldCom and the rest of the corporate crooks? Get 'em all..from Bush on down!

We can't even calculate the enormous dollar amount that this debacle will cost taxpayers...it's stratospheric! And the 'best' is yet to come...the Gov. will be taking over Fannie and Freddie! Hide your wallets!!!

Every hard working American can relate to this post from the L.A. Times Real Estate blog this a.m. I couldn't have said it any better.

I worked full time during college, slept very little, finished an engineering degree in 4 years, accepted no financial aid, and graduated without debt and money in the bank. I lived frugally for years and saved 20% for a down payment on my first house so I wouldn’t have to pay PMI. Even with a large down payment and no debt, my lender scrutinized all my financials in great detail and forced me to account for every penny of my down payment. It is simply astonishing that unqualified homebuyers were able to borrow large sums of money with little or no down payment and no income verification.

Saving and investing for my kids’ college started before they were born. This preplanning insured that they now have adequate funding to meet their entire educational funding requirements while attending the private universities of their choice. This adequate personal funding makes them ineligible for any institution or government financial aid and forces each of them to pay inflated full list prices for tuition. Others who lived lavishly and didn’t plan or save are now attending the same schools with huge subsidies from my tax dollars and and my children's full list price tuition.

My family has always been insured for medical emergencies even in difficult times of temporary unemployment. On the rare occasion I’ve had to take a child to the emergency room, we were forced to wait hours for hoards of uninsured patients receiving free medical care paid for with my hard earned tax dollars.

I have worked hard and have been successful for my family. Despite paying higher taxes than most, my family was ineligible for the Bush “economic stimulusâ€

Originally Posted by AmericanMe

I spent some time checking out foreclosure lists in and around L.A. County and San Beranrdino County. It was NO surprise that at least 80% of the foreclosed properties had been owned by persons with an hispanic last name...thousands of them!

Bush kept pushing the American dream...home ownership for every immigrant! The commercials all featured hispanic families standing in front of their newly purchased dream home...their $500K CA dream home. But Pedro and Maria only had a combined income of $30,000! No problemo...they got the loan in five minutes...no down, no docs, stated income...and, presto...the American dream. But no one bothered to do the simple 6th grade math to show that they could never afford to pay for it!

Bush, Greenspan, Paulson, Dodd, Schumer, and all the Fed regulators belong in prison, along with the lenders and morgage brokers who co-conspired! Why stop with Enron, WorldCom and the rest of the corporate crooks? Get 'em all..from Bush on down!

We can't even calculate the enormous dollar amount that this debacle will cost taxpayers...it's stratospheric! And the 'best' is yet to come...the Gov. will be taking over Fannie and Freddie! Hide your wallets!!!

Your 100% correct AmericanMe! The Orange County Register did a story on such foreclosures last year. They focused on a neighborhood in Santa Ana in which virtually every resident interviewed was an illegal hispanic who was going to lose their home to foreclosure. They interviewed one illegal who was a janitor and his wife worked in a factory, both making just above minimum wage. Yet, they were able to secure a home loan for close to $400,000!

Ok, for some perspective. I live in So Cal, have an education and was making well over minimum wage (at least I was at the time). Yet, I could not even qualify for a $400,000 home loan, despite having great credit! I didn't make enough to qualify! It was that simple! How does some illegal invader who makes minimum wage expect to qualify? It's insane!

Article said there were 10 homes on that street that were in foreclosure, probably under similiar circumstances. Are these the people our government wants to bail out??

Originally Posted by NoBueno

Originally Posted by AmericanMe

I spent some time checking out foreclosure lists in and around L.A. County and San Beranrdino County. It was NO surprise that at least 80% of the foreclosed properties had been owned by persons with an hispanic last name...thousands of them!

Bush kept pushing the American dream...home ownership for every immigrant! The commercials all featured hispanic families standing in front of their newly purchased dream home...their $500K CA dream home. But Pedro and Maria only had a combined income of $30,000! No problemo...they got the loan in five minutes...no down, no docs, stated income...and, presto...the American dream. But no one bothered to do the simple 6th grade math to show that they could never afford to pay for it!

Bush, Greenspan, Paulson, Dodd, Schumer, and all the Fed regulators belong in prison, along with the lenders and morgage brokers who co-conspired! Why stop with Enron, WorldCom and the rest of the corporate crooks? Get 'em all..from Bush on down!

We can't even calculate the enormous dollar amount that this debacle will cost taxpayers...it's stratospheric! And the 'best' is yet to come...the Gov. will be taking over Fannie and Freddie! Hide your wallets!!!

Your 100% correct AmericanMe! The Orange County Register did a story on such foreclosures last year. They focused on a neighborhood in Santa Ana in which virtually every resident interviewed was an illegal hispanic who were losing their home. They interviewed one illegal who was a janitor and his wife worked in a factory, both making just above minimum wage. Yet, they were able to secure a home loan for close to $400,000!

Ok, for some perspective. I live in So Cal, have an education and was making well over minimum wage (at least I was at the time). Yet, I could not even qualify for a $400,000 home loan, despite having great credit! I didn't make enough to qualify! It was that simple! How does some illegal invader who makes minimum wage expect to qualify? It's insane!

Story said there were 10 homes on that street that were in foreclosure, probably under similiar circumstances. Are these the people our government wants to bail out??

It's sooo fishy, NoBueno! I actually think that the unskilled, illiterate hispanics (legal and illegal) were targeted for this scam...BECAUSE they were igorant and illiterate sitting ducks! I personally know someone who owns a Century 21 franchise in a hispanic neighborhood. He went from pauper to multi-millionaire in THREE years...and ALL of his 'clients' were low income hispanic!

And here's the other side of the coin: Most of the hispanics (legal and illegal) had NOTHING to begin with...they were living in apts or little houses with 2 or 3 other families...all splitting the rent. They had NOTHING to lose by signing on the dotted line. And when the jig was up, and they were finally foreclosed upon...it was not a big deal to them! They just WALKED AWAY....back to the life they had BEFORE the real estate sharks got them. They had NEVER invested in America...therefore it was no big deal...nothing ventured, nothing gained!

Most of the RE agents in San Bernardino, South Central, East LA, etc are HISPANIC...they rushed out to get that RE license as soon as the boom started. They were not even qualified...all they had to do was go door-to-door and pick up 'clients'. The sold their fellow hispanics a bill of goods and then took the money are ran! They made out like bandits (which they are)!

It was a win-win for Mexico; and a lose-lose for America! It's the worst scandal in the history of this country! And EVERYONE from the FEDS on down was complicit! We deserve a day in court!

How right you are AM. In fact, I think one of the reasons our government is bending over backwards to bail these people out is because the majority of them are hispanic and or illegal!

Somehow, I do not believe our government would be so eager to bail out foreclosures if the majority of them were hard working American citizens who were losing their homes. They would be told," Tough luck! You should have known better!"

Not the illegals, they are perceived as poor innocent victims worthy of a bailout ! I'm almost certain now that Bush was getting inside pressure from the pro-illegal invader/hispanic first groups, to take action regarding hispanics facing foreclosure. I would bet anything on that!

Like you said, the illegals have absolutely nothing to lose by signing on the dotted line. They can either continue living they way they had previously with ten to a one bedroom apartment, or even better for them, pack their bags and head back to mexico for a year or so and cross again sometime later. Either way, they have nothing to lose as it will be left to the middle class American tax payer to clean up the mess !

Exactly, NoBueno! The chosen ones...the precious cheap labor force...have to be protected at all costs! We are replaceable...but NOT that cheap labor!

If we could get our hands on a complete nationwide list of ALL foreclosures and the surnames of the defaulters, we might be able to make a case against the Gov. and lenders for criminal intent to commit fraud, or something like that. This was definitely a case of no oversight or regulation, and dereliction of duties. It makes the dot.com bust look like a walk in the park! It's worse than Enron, et al; it's worse than the junk bond scandal in the 80's; and the Keating Five scandal. IMO, it's the biggest heist ever committed on our soil!