I've been checking out different elements of the financial shennanigans lately if only to gain a better understanding of what's going on. So with that being said:
Que, I know you meant well by posting that article earlier in this thread... But the guy who wrote it is full'o'shit! Dude is doing nothing other than spewing verbal-damage control. The ironic part about it, is that even if I believed everything he said, it
still sounds bad.
He's trying to prevent an investor reaction such as this:
Dude is either not-well informed, or he is LYING (I presume the latter). For example, check out this quote from the article:
"...
Q: Why are investors suddenly sour on Fannie and Freddie?
A: It's less a sudden change of heart than a long, steady erosion of confidence that parallels the nationwide housing crisis. These two financial institutions package mortgages belonging to the healthiest borrowers and sell them as securities, long considered the safest of bets.
OUT. RIGHT. LIE.
It's true that Fannie & Freddy were
supposed to accept mortgages from the healthiest borrowers, but they got greedy. They were supposed to back mortgages on the "sound" 80/20 rule (20% down, bank finances 80%). But they shifted from actually reviewing potential borrowers risk-assessments, to just accepting mortgages based on credit scores.
As a result, the lenders who were selling them mortgages (many who were shady in their own right like CountryWide), basically started putting lipstick and fingernail polish on just about everything they submitted. Knowing d@m well that some potential home-owners just might be getting in over their heads.
Fanny & Freddy HAD to know that this was going on. But they were more concerned about quantity instead of quality. How many subpar "0% down" loans did they approve just because it had make-up on? And I'm not knocking any home-owner who was able to get a house under those conditions, but Fannie & Freddy as government-sponsored enterprises were supposed to be more frugal. They weren't, so that statement in the article is a hidden LIE.
"...Q: Is there evidence that Fannie and Freddie are taking the kind of losses suffered by commercial mortgage lenders?
A: No, their losses are within historical norms..."
5 TRILLION dollars? If it's so
historically normal, than why do they
now need to be bailed out? Fact is, they've been accepting risky loans which is now coming back to bite them in the butt now that financial pressure is on the economy (a good portion of which F&F helped produce).
These banking institutions might as well rename themselves Betty Crocker because they seem to have a shitload of
cooked books. Then you have these guys:
Citigroup's $1.1 Trillion of Mysterious Assets Shadows Earnings
This appears to be typical behavior in the banking world. Citigroup was already sweating bullets over the $2.2 Trillion they have to come up with to balance out. That is, until the cat got out of the bag and now everyone knows that they're hiding another $1.1 Trillion of debt under their mattress.
Apparently,
Hedge Funds are not regulated. So when it's time for them to report their earnings each quarter, they break out their aprons and wooden spoons and start making Hedge Fund Soup. But now that there is an economy crunch, somebody is giving away all the secret ingredients... Let's see what they report on July 18 for the 2nd quarter.
Then there's these guys again:
*We
know IndyMac basically folded leaving everyone of their members and investors forming lines trying to recoup their money.
*We
know that the FDIC guarantees most member's money up to 100 G's.
*It
looks like the FDIC currently has a list of at least
76 banks that may be in trouble.
*But it
appears the FDIC may have to absorb
$6-7 Billion
of IndyMac's woes in order to reimburse members. Which is more than 10% of the FDIC's available funds ($53 billion).
Which brings us to the real
pink elephant in the room that I haven't heard anyone in the media talk about:
*
IndyMac wasn't even on the FDIC's list of troubled banks!
So in these shaky times, what happens if two or three banks go down at the same time?
This crap is a lot more serious than I first thought...