I don’t have time to write this up right now but I urge all of you to read this. Every word. Right now. This entire Fannie/Freddie story is not what it seems. It not a ‘bailout’ by the Gov’t trying to be proactive and get ahead of a failure. These are already the largest corporate failures in history due outright fraud. These two companies and out of touch regulators have put every US tax payer and perhaps the US credit rating itelf in jeapordy. Deloitte and Morgan Stanley busted them. The criminality is something for a feature film.
I will entice you by leading in with ‘Fannie Mae did not count a loan ‘delinquent’ until the borrower was TWO YEARS LATE.’ Throughout time, most have had a 90-day policy that results in accounting action. Well, that’s of course you talking talk about Second Mortgages, which some banks including Wells Fargo have now extended to 180-days.
We also learned that Fannie guarantees $400 billion and Freddie $800 billion in Alt-A and Subprime. Everyone thought they had $700 billion in total. That’s almost 20% of all their holdings. Given how poorly private labeled Alt-A and Subprime are performing and how the GSE’s hid defaults and foreclosures, the losses must be multi-hundred billion dollar, staggering arena.
This is the largest fraud story in the world’s history. This makes ENRON look like a shoplifting. When you are done reading, think again about the $5.2 trillion in retroactive MBS guarantees that they are thinking about putting on the tax payer and how much of that really may be bad paper.
Fannie lied and cheated for years. Several years ago they kicked out the old CEO’s and the new ones appear to be even more crooked. Hat-tip Gretchen Morganson. -Best Mr Mortgage