GSE’s subordinated debt unlikely to trigger credit default swaps (CDS)

August 26, 2008 by · Leave a Comment
Filed under: Economic News 

Could this be the hidden grenade that will start the CDS market to implode?   Most likely not, but if you read the details, the government would have to step in at a point for it not to be considered a default under the credit default swap contracts.

What does this mean?

Most importantly it would mean more treasury printing to cover these payments which would in-turn mean more price inflation as we inject money into the system to cover these liabilities.  Keep an eye out for any press about the CDS market, please goto out “About” page and email us if you think your find is news worthy and we will cite you in the post.

Release:

Sellers of protection on Fannie Mae subordinated debt are unlikely to be required to pay out on the contracts even if the mortgage finance companies defer interest payments.

Losses from residential mortgages the companies guarantee have created concerns Fannie and Freddie may defer coupons if capital levels fall below minimums required by regulators.

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Bill Gross & Dan Fuss say new GSE deals need Treasury Support

August 25, 2008 by · Leave a Comment
Filed under: Industry News 

I agree with Bill Gross of Pimco (world’s largest bond manager), I would also need government for any deal that involved funding our two troubled government sponsored enterprise (GSE). I am surprise this actually made news, I thought we all knew this was “implied“. Enjoy.

Release:

Two of the biggest U.S. bond investors said they would get involved in a capital raising by Fannie Mae and Freddie Mac as long as the U.S. Treasury participates in the new deals.

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Fannie Mae opens satellite offices to sell REO foreclosures

August 24, 2008 by · Leave a Comment
Filed under: Industry News 

With the amount of listings that Fannie Mae hold in those two states, this does not surprise.  We did a online review on Fannie Mae REO Property listings.

Fannie Mae is rethinking how it will handle the tens of thousands of properties being repossessed as the real estate market continues to plummet.

To that end, it is opening two satellite offices, one in California and another in Fort Lauderdale, Fla., to manage and sell its foreclosed properties in those states, said Marilyn Kornfeld, a spokeswoman for the Washington, D.C.-based company.

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Bailout concerns slam Freddie Mac and Fannie Mae shares

August 18, 2008 by · Leave a Comment
Filed under: Industry News 

More concerns on Freddie Mac and Fannie Mae capital situation have come to bear again.  At the time of this reading, the Dow Jones has fallen 188 points.  The article talks about how a nationalization is getting more likely as time passes and if this happens then shareholder value will be wiped out.

Article:

Investors dumped shares of Fannie Mae and Freddie Mac on Monday after Barron’s reported the increasing likelihood of a U.S. Treasury bailout that would approach nationalization of the two housing finance titans.

The weekly financial newspaper said such a move could wipe out existing holders of the largest U.S. home funding companies’ common stock. Preferred shareholders and even holders of the two government-sponsored entities’ $19 billion of subordinated debt would also suffer losses.

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Jim Rogers Speaks the Truth about Fannie Mae and Freddie Mac

August 9, 2008 by · Leave a Comment
Filed under: Industry News 

Very interesting exchange with Jim Rogers and CNBC and guest.  I think we is speaking the truth, our financial system looks to be past the point of no return with too much leverage and liability.  We just keep doing short term fixes to fix long term problems and we are just creating inflation and ruining the credit of the United States.  This can only go on so long until a correction is due.

Jim Rogers Speaks the Truth about Fannie Mae and Freddie Mac

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