If you're wondering why the stock market is taking a nose dive today, Barrons reported the government is planning on Freddie Mac and Fannie Mae to not be able to raise enough capital.
Add in the federal debt ceiling, and it’s a reminder of how deep in the red the government already is. The current debt limit of about $9.815 trillion will be exhausted this fall, and the Democrats’ new 2009 budget plan calls for raising the ceiling to $10.615 trillion — an $800 billion increase.
Fannie Plan a `Disaster' to Rogers; Goldman Says Sell
They are short, at least there is a disclosure.
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. Rogers is betting that Fannie Mae shares will keep tumbling.
Treasury Secretary Henry Paulson said the Bush administration plans to ask Congress to enact legislation to temporarily increase the line of credit that the companies have with the Treasury. It would also allow the Treasury to buy stock in the companies.
Paulson also said the Federal Reserve should be given a greater role supervising the finances of Fannie and Freddie.
In addition, the Federal Reserve announced Sunday that the mortgage finance companies can turn to the Federal Reserve Bank of New York for funds. The move gives Fannie and Freddie the same access to the funds as commercial banks and Wall Street firms. The agency granted investment banks such access earlier this year in the wake of a similar crisis of confidence when investors lost faith in Bear Stearns
Former Federal Reserve Chairman Paul Volcker said the central bank's loan to an investment bank last month was at ``the very edge'' of its legal authority.
Mideast sovereign wealth funds may fail to save troubled U.S. banking giant Citigroup Inc. unless more cash is pumped into the lender, the head of a $13 billion Dubai-owned investment firm said Tuesday
Warren Buffet's Kiss of Death on Minyanville is a most interesting analysis of Buffet's offer to give $800M to the bond issuers. The offer was presented as help and this article says more it's just Buffer smells a fire sale and will bottom feed, grabbing any debt that's actually good.
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