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chainfree

Fannie And Freddie

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Lest anyone think the worst of the credit crunch is over, I thought members might find this extract from the Los Angeles Times interesting:

"Several months after many thought the financial system was well on its way to recovering from the mortgage meltdown and resulting credit crisis, worries about Fannie Mae and Freddie Mac showed that "the credit crunch, far from being over, has a lot more chapters to play out," said Kingman Penniman, head of KDP Investment Advisors Inc. in Montpelier, Vt. "It's a crisis of confidence, and it shows how fragile that confidence can be."

Fannie Mae and Freddie Mac buy or guarantee home loans and mortgage securities, and together stand behind almost half of the nation's mortgage debt. Their importance to the housing market has only increased in the last year as banks and others that financed mortgages have pulled back after suffering deep losses on subprime home loans.

The woes of Fannie and Freddie may make it more likely that scores of large banks and brokerages also will need to raise billions of dollars in capital.

"This additional turmoil in the mortgage market could put further pressure on financial institutions around the world," Penniman said.

The fate of Fannie and Freddie was the topic du jour in Washington.

"Freddie Mac and Fannie Mae are very important institutions," President Bush said after holding a previously scheduled meeting with his economic advisors. The Treasury secretary, the president added, "assured me that he and [Federal Reserve Chairman] Ben Bernanke will be working this issue very hard."

It was clear the government was weighing various options should the mortgage holders fall into deeper distress."

When America sneezes -the rest of the world catches a cold. T'was ever true....

Add to this the recent Bradford & Bingley wobble this week. What's happening may be more than just "a correction"?

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Chainfree - (Did you put this on the main forum? You would have gotten more of a response there...) You're right, and I'm wondering just how much of the US stuff we will have to face here with British banks.

When you see those youtube clips of tent cities and shanty towns, and perfectly middle class people living in them and their cars and RVs in designated parking lots... it's all very scary!

I heard a radio 4 interview with a lady who was the head of the FBI fraud investigation unit, that's looking into the sub-prime mortgage market in the US, she was very good, and wouldn't be drawn into commenting on whether they were looking into non-US banks, but she conceded that her investigations had meant she had spoken to people in other countries in a way that implied it wasn't just an American problem...

Eric Pebble would have been delighted listening to it!

Even if it is going to be a "correction" it going to be a whole bottle of tippex, rather than a few carefully placed splodges to sort this one out!

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Thanks for the response W&S.

As soon as I posted this item I realised it probably should have gone on the main forum, but I'm still new to forum "form" and was a bit chicken to go there too! :unsure: However, Norfolk/East Anglia is no more isolated from these matters than the UK or Europe.

These too strangely named entities guarantee several Trillion (not billion!) Dollars of mortgage/loan debt. And if these two are in trouble, then everybody's in trouble! UK lenders have bought into a big slice of the US debt market and they are still trying to get their balance sheets to look half acceptable to shareholders/members - and thats only based on sub-prime exposure revealed so far. Tip of the iceberg...

But point taken - this topic belongs on the main forum really. :)

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No, I'm generally far too chicken to put stuff on the main forum too (I made a comment about a week after I signed up and someone told me I was stupid, and it took me months to brave the main forum to post anything again...) but it was well written, and I thought you might get some responses from the wise... So long as you don't mind my inane replies, then it's all to the good to have stuff on here as well as the main forum!

The A&L takeover is interesting - I've been out of the loop for a few days, and don't have time to read all the pages about it on here - but heard on the radio that it was a good thing because it was a European bank that didn't have much involvement in the US mess - but I'm wondering how Europe in general, and how Spain in particular is faring at the moment - they have housing problems of their own from what I can make out (although the man from Polaris world would have you believe otherwise... ;) ) They also mentioned it could be a bad thing for jobs as it might just get all merged with the Abbey employees, and also for the mortgage market, as there may be fewer products out there....

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Fannie & Freddie? Sounds more like a children's TV show. :lol: Weren't they on Thames TV's Rainbow in the 70s and 80s? ;)

I get ignored quite a bit on the main forum. :unsure: Maybe thats not such a bad thing. :huh:

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Fannie & Freddie? Sounds more like a children's TV show. :lol: Weren't they on Thames TV's Rainbow in the 70s and 80s? ;)

I get ignored quite a bit on the main forum. :unsure: Maybe thats not such a bad thing. :huh:

Sorry Matt - not ignoring you, but you got your reply in just as I was doing my chicken thing...

Definitely not Rainbow, but I know what you mean. Fannie & Freddie are American - so that explains a lot! :D

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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