USGOV backstops Freddie/Fanny

[sinophile]

Iran, China, etc. The real fight is inside the US. Some wild headlines before Monday's market open. Challenging times for a lame duck US President.

Backstop plan
http://biz.yahoo.com/ap/080713/mortgage_giants_crisis.html?.v=8
More failures possible if not likely
http://apnews.myway.com/article/20080713/D91T7VL00.html
Dollar gains slightly
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahSRHM8hXIEw&refer=home

Sen Schumer ought to be censored in the US Senate for the public release of his comments (http://biz.yahoo.com/ap/080713/indymac_schumer.html) on IndyMac bank.

[LaoSexMachine]

Nothing new. We bailed out the car companies before and this is just 'business'. Use tax payers dollars on business that that did shady shat.

[sinophile]

I have to disagree that there is nothing new here. First, you had a good size failure in IndyMac, with more a possibility (http://caps.fool.com/Blogs/ViewPost.aspx?bpid=70338&t=02001341965050383132). Not sure if this is correct, but I've read its the 2nd largest bank failure?


``IndyMac is the vanguard, the precursor of more stuff coming,'' said Christopher Whalen (http://search.bloomberg.com/search?q=Christopher+Whalen&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), managing director of Institutional Risk Analytics, a market research company in Torrance, California. ``It's not surprising to see IndyMac resolved. What you have to ask is what's coming next. It's going to be a wave of medium to bigger-than-medium institutions.''

And I've read the FDIC is underfunded (http://www.creditbubblestocks.com/2008/07/you-know-saying-celebrities-always-die.html) if this grows in proportion (a problem easily solved by Congressional mandate and increases in premiums). Which brings me to what's new... Unlikely there would be new taxes in an election year and Congress may have to hit the accelerator on the Treasury presses. How much equity is really left in the US dollar to sustain further growth in the money supply?

I know its not the economicphotos.net, but at some point this would have to affect military spending, homeland security spending and many other government programs. And it will probably hit taxpayers too.

[Ordie]

What would China do if banks and lending institutions fail overnight?

[LaoSexMachine]

I have to disagree that there is nothing new here. First, you had a good size failure in IndyMac, with more a possibility (http://caps.fool.com/Blogs/ViewPost.aspx?bpid=70338&t=02001341965050383132). Not sure if this is correct, but I've read its the 2nd largest bank failure?



And I've read the FDIC is underfunded (http://www.creditbubblestocks.com/2008/07/you-know-saying-celebrities-always-die.html) if this grows in proportion (a problem easily solved by Congressional mandate and increases in premiums). Which brings me to what's new... Unlikely there would be new taxes in an election year and Congress may have to hit the accelerator on the Treasury presses. How much equity is really left in the US dollar to sustain further growth in the money supply?

I know its not the economicphotos.net, but at some point this would have to affect military spending, homeland security spending and many other government programs. And it will probably hit taxpayers too.

Look into the US guberment history on bailing out corporations.

[sinophile]

What would China do if banks and lending institutions fail overnight?

Everything in their power to keep them afloat. For every dollar the USGOV prints that finds its way to China (which is a lot) the Chinese central bank has to print 6.89 RMB and hold that foreign currency. As the dollar drops China watches its dollar investment fall and its inflation increase. Unfortunately, allowing the RMB to appreciate too quickly would slow China exports and job creation at about the same rate as a plane crash.

In my opinion... China and US interests are in alignment on this score.

[sinophile]

Look into the US guberment history on bailing out corporations.

I'll pass, thanks anyway.

[Alexandr]

Huh?
Where have you been last half year?
I posted that in Febriary with number of investment Russia put in US economy to prevent crisis - no one belives me (USA strogn!!!1111)
So here you go now
http://www.*******.com/article/bondsNews/idUSL1252411520080712
" July 12 (*******) - Russia, a holder of about $100 billion in U.S. agencies' debt, including securities of Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz), said on Saturday it was happy to hold the debt and had no immediate plans to reallocate."

"The Russian central bank, which holds $574 billion in gold and forex reserves, said in May it had about $100 billion invested in the securities of U.S. agencies at the end of 2007, with the majority in short-term paper.

Russia has bought the U.S. agency debt seeking to boost returns on the investment of its reserves, the world's third largest. The reserves also de-facto include Russia's two oil funds, where the country stashes its energy export revenues."

[loganinkosovo]

Nothing new. We bailed out the car companies before and this is just 'business'. Use tax payers dollars on business that that did shady shat.

Funny how the name Jamie Gorelick keeps popping up.......

Then there is this dumb****.....

An important angle in the IndyMac failure that may get lost in ominous headlines tonight and tomorrow: federal regulators pointedly cited U.S. Sen. Charles Schumer, D-N.Y., in explaining the bank's failure. In simple language, federal regulators blamed Schumer for a run on the bank. Here's from the press release issued by IndyMac's regulator, the Office of Thrift Supervision (http://www.ots.treas.gov/docs/7/778029.html): "The OTS has determined that the current institution, IndyMac Bank, is unlikely to be able to meet continued depositors’ demands in the normal course of business and is therefore in an unsafe and unsound condition. The immediate cause of the closing was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York. The letter expressed concerns about IndyMac’s viability. In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts.
"This institution failed today due to a liquidity crisis," OTS Director John Reich said. "Although this institution was already in distress, I am troubled by any interference in the regulatory process."
Schumer's response? In an e-mail quoted by Bloomberg News, (http://www.bloomberg.com/apps/news?pid=20601087&sid=atyF3ydPUlk8&refer=home) he says: "If OTS had done its job as regulator and not let IndyMac's poor and loose lending practices continue, we wouldn't be where we are today ... Instead of pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs.''


http://latimesblogs.latimes.com/laland/2008/07/feds-cite-schum.html

[dava]

Well, have fun bailing out 5 trillion dollars of debt.
Watch the dollar slide while that amount is being printed by Bernanke.

Budweiser being sold to an belgian brewer, Chrysler-building sold to Abu Dhabi.
Looks like everything american isnt american anymore.

[brainplay]

Schumer's response? In an e-mail quoted by Bloomberg News, (http://www.bloomberg.com/apps/news?pid=20601087&sid=atyF3ydPUlk8&refer=home) he says: "If OTS had done its job as regulator and not let IndyMac's poor and loose lending practices continue, we wouldn't be where we are today ... Instead of pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs.''


So IndyMac gets into a bit of trouble but could have theoretically pulled itself out. Makes news. People panic and mass withdrawls ensue sort of like the old "panic of 1907". IndyMac hits liquidity crisis. Fails. Sen. Schumer doesn't understand failure cause and rubs it in.

Did I get that right?

[2Sheds_Jackson]

So IndyMac gets into a bit of trouble but could have theoretically pulled itself out. Makes news. People panic and mass withdrawls ensue sort of like the old "panic of 1907". IndyMac hits liquidity crisis. Fails. Sen. Schumer doesn't understand failure cause and rubs it in.

Did I get that right?

Yeah, that's about right. I challenge any bank, even the most solvent, to hand each depositor back their cash in one day. Simply not gonna happen. Schumer simply couldn't resist an opportunity to get his face on the evening news for 7 seconds...I do hope he enjoys the fruits of his labors.

IMO, if taxpayers are going to bail out these lenders - then we're entitled to subject them to a royal anal probe to see what they did to get there, and we're also entitled to create some new law/regulation so that it can't happen again. The motherf*ckers who got insanely rich off all this shady lending are long gone with their golden parachutes and business jets - leaving the rest of us to pick up the pieces.

[Klatuu]

... I challenge any bank, even the most solvent, to hand each depositor back their cash in one day. Simply not gonna happen...


See Also:
Fractional Reserve Banking (http://en.wikipedia.org/wiki/Fractional-reserve_banking)

[SuperCavitator]

IMO one significant cause of the FM stock slide is the short sellers. Those MFs are experts in forcing stock prices down. This is not tin foil hat stuff. It's simple market dynamics. The short sellers can push large quantities of a stock onto the market - that usually lowers the price per share. They borrow the large quantity, sell it early in the slide, wait for the catastrophe that results, buy the same volume back at a fraction of the cost, and pocket the difference.