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The Fannie and Freddie Stakes Are High

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Re: The Fannie and Freddie Stakes Are High

#31

Post by TuringNYC »

rybosworld wrote: post #7

It will be pretty bad for young folks in general if Fannie and Freddie are released from conservatorship. If anything, they should be dissolved entirely. Releasing them will create a privatized monopoly and further inflate housing prices. This would be really great news for several dozen ultra wealthy folks, moderately good news for existing home owners, and bad for anyone else.

>> Releasing them will create a privatized monopoly and further inflate housing prices.

Low rates do not lower home prices-- they just let people borrow more and inflate home prices. One possibility is that artificially low rates rise to market rates...and home prices fall commensurately, or rise less to accomodate.

Re: The Fannie and Freddie Stakes Are High

#32

Post by margalabargala »

onlyrealcuzzo wrote: post #13
bko wrote: post #11

Earlier quoted context omitted.

I don't think its a good idea but I think it's in the long run interest of the government/taxpayer to divest out of Fannie/Freddie. The current situation makes that impossible, so they'll have to take some kind of haircut. As the article discusses, one of the options is to screw over current investments (Ackman) and raise an IPO, although it would be impossible to raise enough to buy the government out at its current…

> As the article discusses, one of the options is to screw over current investments (Ackman) and raise an IPO Ackman is not getting screwed. When the government essentially nationalized Fannie and Freddy, they made it clear that the stock in those companies was worthless. Ackman bought it, thinking his billions would be enough to lobby the government into zeroing out their share and handing him $600B. He's not gettin…

> He's not getting screwed if they say, "you bought worthless stock, and it's still worthless, sorry."

Sure he is. He's just doing it to himself.

Re: The Fannie and Freddie Stakes Are High

#33

Post by jgalt212 »

williamcotton wrote: post #20
jgalt212 wrote: post #17

Earlier quoted context omitted.

Loosening up zoning laws to allow for much greater supply of housing. Blue states don't do this because it would be bad for the investor class who's owns real estate.

In states where there are looser zoning laws and more housing is built, who invests in and profits more from the new construction, the investor class or the poor?

In such scenarios, there are no excess returns from home construction. Homebuyers benefit from abundant supply.

Re: The Fannie and Freddie Stakes Are High

#34

Post by StanislavPetrov »

phkahler wrote: post #15

All that talk of putting home equity into bitcoin... The big players have been trying everything to unload bitcoin onto the public - floating the idea of government having a "strategic bitcoin reserve" and other nonsense. Now this? On a related note, the US housing market is overdue for price collapse part II. I'm very interested to understand what's holding them up so high - increasing even as interest rates rise. H…

>I'm very interested to understand what's holding them up so high - increasing even as interest rates rise.

Mostly lack of liquidity. Unless forced, very few people who are sitting on a 2% mortgage are going to sell and take on another mortgage at 8%. Supply has gone up a little since the Covid lows but it still nowhere near where it was during the last collapse in 2007/2008 when sellers were legion.

https://en.macromicro.me/charts/32/existing-home

Re: The Fannie and Freddie Stakes Are High

#35

Post by bormaj »

bko wrote: post #11
onlyrealcuzzo wrote: post #4

> One possibility here is for the government to cancel its entire $348.4 billion senior preferred claim for the benefit of existing common and preferred shareholders. That is obviously what those shareholders want It seems the only reason the government should give up ~$28B in revenue PER YEAR for literally nothing is to put the government in more debt and give free money to Bill Ackman.

I don't think its a good idea but I think it's in the long run interest of the government/taxpayer to divest out of Fannie/Freddie. The current situation makes that impossible, so they'll have to take some kind of haircut. As the article discusses, one of the options is to screw over current investments (Ackman) and raise an IPO, although it would be impossible to raise enough to buy the government out at its current…

What's the net benefit to the taxpayer/government for divesting from Fannie/Freddie?

Re: The Fannie and Freddie Stakes Are High

#36

Post by ethagknight »

sidewndr46 wrote: post #25
ethagknight wrote: post #23

Isnt the obvious answer for the Fed to start dropping interest rates somewhere in between the 0 and current level? eases a lot of pressure on the underlying assets and allows for markets to start moving again. Even if it's a short reprieve from current rates, a window to repackage and move assets would buy everyone time and start to bleed off some underperforming notes (or maybe just the marginal ones, still reducing…

This seems to be the quintessential comment along the lines of how we can kick a time bomb down the road a bit.

Well no not at all, the loans already exist, and I guess you assume write offs are a given, so rip the bandaid off? Why not work to avoid?

Loans are tied to a term, borrowers can resolve their own liquidity issues, so it’s not crazy to give underwater loans time and breathing room in rate to work out without forcing a collapse. Simply broaden underwriting requirements for new loans.

Time, value, and risk, right?

Re: The Fannie and Freddie Stakes Are High

#37

Post by Eddy_Viscosity2 »

bko wrote: post #12
floren wrote: post #5

Earlier quoted context omitted.

Yeah it would be pretty fucked up if the current administration pushed something that's bad for the US government but very good for some billionaires. I assume the only reason it hasn't happened yet is that Trump is still figuring out how to tank Fannie/Freddie shares beforehand so he and his cronies can buy them up like they did with the on-again off-again tariff threats.

As the article discusses, the government owns virtually every dollar of profit Fannie/Freddie. I don't see how tanking the private shares (worthless in the current state) would benefit Trump or his cronies. Those shares are already owned by billionaires, I guess new ones can buy them?

Those billionaires could buy Trump-Coin, or Trump-Stock, or just dump trucks full of cash on the white house lawn. The mechanisms for bribery are manyfold and consequence free. They don't even bother pretending its anything but anymore.
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