Breaking: A spokesperson for the Federal Reserve has denied that Fannie Mae and Freddie Mac have access to the discount window!
The Fed will no doubt get a lot of criticism for letting this story hang out until after the market closed, allowing the end of the day rally.
Update: Bloomberg's got the story now. "The Federal Reserve has not had any discussions with Fannie Mae and Freddie Mac about access to direct loans from the central bank, Fed spokeswoman Michelle Smith said."
Posted by mrpink , Jul 11, 2008 4:28PM
Insane. Infuckingsane.
-mrp
Posted by guest , Jul 11, 2008 4:29PM
they waited until close. nice played, beard. you bought yourself 48 hours.
Posted by guest , Jul 11, 2008 4:29PM
I am going to cry myself to sleep tonight. We are all completely fucked.
Posted by guest , Jul 11, 2008 4:33PM
Finally. The Bush administration shows some spine in its dying days.
Posted by mrpink , Jul 11, 2008 4:33PM
I'm going to a bar and just order a BOTTLE of rum.. fuck the glasses..
I do admit, well played, when'd they issue it? 4:18? right after ES close in Chicago. Nice.
-mrp
Posted by FUNdamental , Jul 11, 2008 4:36PM
@mrp - I'm about to dial up either a bottle of makers/Jack/Knob Creek. Maybe world peace breaks out this weekend and we all have a sunny monday.
Posted by mrpink , Jul 11, 2008 4:42PM
FUNdamental-
Right on. I think Makers is in order tonite, maybe Wild Turkey ~ 11PM just to set the mood...
Have a good weekend fellas, I'll be back in NY in August.
-mrp
Posted by AJ , Jul 11, 2008 4:53PM
Carney, where's a link... You seem to have scooped everyone else...
Posted by StMarc , Jul 11, 2008 4:54PM
Ooh, that's gonna leave a welt. Markets: spanked.
M
Posted by JorgeCad , Jul 11, 2008 4:58PM
This post is dying mates.
Instead of bourbon try scotch lads. In all seriousness, markets have puked - deal with it.
LEH is gone, thanks for coming out.
The sad reality is that people don't want to deal with a sinking ship.
Just deal (or don't) with it.
geo
Posted by guest , Jul 11, 2008 4:58PM
http://www.bloomberg.com/apps/news?pid=20601087&sid=a79GKfbIbW10&refer=home
Posted by guest , Jul 11, 2008 5:02PM
Well said JorgeCad, LEH is dead...sigh
Posted by Anal_yst , Jul 11, 2008 5:03PM
I think tonight, I will hold a pre-memorial service for AB (the company, not the commentor), and pound about 2-dozen BUD pounders to the face.
Who's with me?!
Posted by FUNdamental , Jul 11, 2008 5:08PM
@anal - There is a bar on delancey that does a $5 bottle of bud and shot of jack, that's a proper sendoff!
Posted by guest , Jul 11, 2008 5:21PM
@4:58,
I read your Bloomberg link. Thank you. Sounds to me as though the talks will occur this weekend, and an announcement about the open window will be made prior to opening bell on Monday. Maybe even becore the Asian markets open Sunday.
That's my read on the situation.
Posted by beentheredonethat , Jul 11, 2008 5:30PM
@4:58
As we now know, the workweek begins Sunday afternoon. Don't think the Japanese would be too pleased if we crash their market while fiddling. I have just poured myself a "Ten High", a Kentucky sour mash, that for the price, is awfully good.
Posted by guest , Jul 11, 2008 6:03PM
so bernanke is more than willing to use taxpayer money to bail out the banks and hedge funds but not so willing to help fannie and freddie, two companies that hold millions of mortgages. If you think the economy is in trouble now, just wait until that wave of foreclosures hits the street, the bankers will run and hide with their tail between their legs as they are not the least bit interested in helping anyone but themselves and their big fat bonuses, and don't forget - practically all the banks rewrote their bonus rules to exclude mortgage and loan losses so the great executives don't lose any of their excessive bonuses. It's no wonder the United States is going straight down the toilet. What a shameful, disgraceful pity.
Posted by guest , Jul 11, 2008 6:15PM
Hey anal, why blame the popular media when you have douche's like 6:03 all over. Sigh.
Posted by guest , Jul 11, 2008 6:21PM
I'm not blaming popular media at all, seems that the people that need help and conincidentally that drive the economy are NOT the ones getting help. keep throwing your money in long oil contracts and shorting the market making sure the US Dollar goes even lower and eventually no one will be doing much. go get drunk like everyone else. your name calling shows your true intelligence.
Posted by guest , Jul 11, 2008 6:23PM
I think I'm gonna buy a new set of Italian loafers. No hangover and the leather smell stays with you for awhile. Better therapy than getting hammered and I can use them a lot longer. But... each to his own.
Posted by guest , Jul 11, 2008 6:24PM
@6:15...please don't argue with the crazies...I just don't have enough energy left anymore to look at their insane ramblings. let's get a drink instead.
Posted by beentheredonethat , Jul 11, 2008 6:27PM
Relax, fellas. We're in this together. FNM & FRE hold TRILLIONS. That is beyond any bailout. If you care to pinpoint the cause here, it is the compensation system of the Street. Name me any other industry that pays out 50% of revenue in compensation? Looking for blame? Allow me to introduce you to the mirror. His name is Narcissus.
Posted by beentheredonethat , Jul 11, 2008 6:29PM
A set of Italian loafers? In this economy, surely a pair will suffice.
Posted by guest , Jul 11, 2008 8:16PM
IndyMac Bank was seized by Federal Regulators this after. Failure is large - bank had assets of $32 billion.
Enjoy the booze and the Italian loafers!
Posted by guest , Jul 11, 2008 8:16PM
IndyMac Bank was seized by Federal Regulators. Failure is large - bank had assets of $32 billion.
Enjoy the booze and the Italian loafers!
Posted by guest , Jul 11, 2008 8:16PM
IndyMac Bank was seized by Federal Regulators. Failure is large - bank had assets of $32 billion.
Enjoy the booze and the Italian loafers!
Posted by StMarc , Jul 11, 2008 8:24PM
Yep. Ouch.
http://news.yahoo.com/s/nm/20080712/bs_nm/indymac_dc
M
Posted by guest , Jul 11, 2008 8:56PM
Sorry all for the triple post. Clearly too much booze not enough Italian loafers.
Posted by guest , Jul 11, 2008 9:41PM
Thanks for the link. Would have probably seen it on CNN later, but always good to know sooner rather than later.
What do you think Bernanke and Paulson are cooking up for Fannie Mae and Freddie Mac over the week-end? Do we live in a democracy any more, or is everything going to be done in an extra legal, secretive, ad hoc fashion?
Posted by guest , Jul 11, 2008 10:17PM
@9:41PM
IMO, There is very little possibility that Bernanke will open up the Fed discount window to Fannie and Freddie over the weekend. Reason being that Paulson and Bernanke told a congressional committee only 48 hours ago that Fannie and Freddie are "adequately capitalised". Imagine how bad they would look to the world if they do an about-face 72 hours later. If they do, the Fed's and the Treasury's credibility will be in tatters and Bernanke and Paulson will have be forced to resign.
Another reason the Fed won't let Fannie and Freddie access the discount window is because of the subsequent crowding-out effects. Fannie and Freddie will need hundreds of billions, if not trillions, in long-term funding to put to rest any doubts about their survival. This is an absolute last resort and will only happen when Fannie and Freddie's equity value reaches ZERO. Why does the Fed want to bail out the shareholders?
Bernanke and Paulson will try to impose a standstill agreement with Fannie and Freddie and appoint a team consist of senior exec's from the Fed and Treasury to supervise the running of the two and in the meantime, try to put together a rescue package that focuses on the establishment of a new agency that takes over Fannie and Freddie. This agency is going to be the other of all "Black-Boxes"!!!!! The Asian and Middle Eastern SWF's will have nothing on it.
Any restructuring and work-out deal is going to be uber-expensive and will have to go through Congress and will take months to put in pass any legislations no matter how urgent is may be. Not to mention we have the Presidential election coming up!
Have a good weekend folks!
Posted by StMarc , Jul 11, 2008 10:20PM
Dunno. Do you suppose there's any way they could organize a joint bailout/propup/orderly exit/whatever like they did with LTCM? I mean, yeah, the GSE's are sitting on trillions, but they just need enough liquidity to keep priming the pump for a little while. If they can walk the line of not out and out saying they won't let them fail while spreading the risk into the system enough to let it blow over, that might actually work for a while.
Otherwise, I see the President directing the Treasury to do whatever will have the worst repercussions for President Obama as he takes office. For whatever reason I just don't see the Fed taking the GSE's in, despite my earlier witty remark. They might see if things cool down Monday and if the the Terrible Twins start back down, say, "Oh, well, we weren't thinking about it before but now that you mention it maybe opening the discount window to GSE's is a great idea."
M
Posted by guest , Jul 11, 2008 10:22PM
@10:17PM
It should read:
'The Mother of all Black Boxes' in the third paragraph.
Posted by StMarc , Jul 11, 2008 10:30PM
Good points, 10:17.
Maybe a mix. If they look like going to zero, halt trading, announce an emergency team to examine them and fix 'em up, maybe combine them, and in the meantime the Treasury and/or the Fed promise that obligations will be met as they come due for the duration of the emergency restructure.
Furthermore, say you're going around to the IB's and other financial bigwigs for infusions of capital as part of a fund (think S&L RTC style thing, only not a bankruptcy clearance, more of a preferred stock fund,) to make it look like the financial industry is stepping up instead of just the taxpayers.
Then bomb Iran to take the heat off.
M
Okay, that last bit was a joke. If it happens, I had NOTHING TO DO WITH IT.
Posted by StMarc , Jul 11, 2008 10:37PM
Incidentally, OTS blames that rumormongering bastard Sen. Charles Schumer (D-NY) for IndyMac's bank run-style failure.
Schumer blames IndyMac's "dumb as a sack of wet hair" management for lending money to dead people, cats, and space aliens.
Only one possible response...
Burn him! Burn the witch!
M
Posted by guest , Jul 11, 2008 11:01PM
St Marc
I think there will be minimum involvement from Wall Street firms in the possible bail-out of Fannie and Freddie. I think confidence is the main issue here and it is preferable that the bail-out is a 100% Federal Government effort. The public at large holds the view that Wall Street got the country into this mess and should not be allowed to profit from it. I kind of agree with this sentiment. At the most, Wall Street firms should only be allowed to arrange the sale of government bonds to finance the bail-out.
It is going to be a taxpayer-funded bail-out. Make no mistake. It is now a matter of doing it as gingerly as possible without damaging the already fragile state of the financial markets and as cheaply as possible.
The final point I'd make is that the housing market hasn't fallen enough for a bail-out to work. It's like trying to prop up the stock market when average P/E is still at 20 times. Prices are still too high.
If I offended anybody with my final point. Sorry...............
Posted by guest , Jul 12, 2008 1:56PM
"Bernanke tells Freddie discount window open"
http://www.reuters.com/article/ousiv/idUSN1134061620080712
Moral hazard? We don't care about no stinkin' moral hazard!
Posted by Joseph di Jersey City , Jul 13, 2008 10:26PM
I think it's a bad sign when so much news happens on Sunday evening.
http://www.nytimes.com/2008/07/14/washington/14fannie.html?_r=1&hp&oref=slogin