Warren Buffett says 'game is over' for Freddie and Fannie

[Dover]

Source: Bloomberg

Warren Buffett says 'game is over' for Freddie and Fannie

Bloomberg News
Friday, August 22, 2008
Fannie Mae and Freddie Mac, the two largest mortgage finance companies, "don't have any net worth," the billionaire investor Warren Buffett said.

"The game is over" as independent companies said Buffett, the 77-year-old chairman of Berkshire Hathaway, in an interview on CNBC on Friday. "They were able to borrow without any of the normal restraints. They had a blank check from the federal government."

Freddie Mac and Fannie Mae touched 20-year lows yesterday on the New York Stock Exchange on speculation a government bailout will leave the stocks worthless. U.S. Treasury Secretary Henry Paulson won approval from Congress last month to pump emergency capital into the companies, which account for more than half of the $12 trillion U.S. mortgage market.

Fannie and Freddie mispriced their products and "kept existing because they had the federal government behind them," Buffett said. Berkshire had been among the largest holders of Freddie until about 2001, when it became apparent the company wasn't being run well, he said.

The two mortgage companies recorded almost $15 billion in combined net losses in the past four quarters as delinquencies rose to record levels, shrinking their capital. The swoon sparked concern they may not be able to weather the worst housing slump since the Great Depression and prompted Paulson to step in with a rescue plan...>


Read more: http://www.iht.com/bin/printfriendly.php?id=15542318

[FreakinDJ]

1. How much will the "Lending De-regulation" cost us this time

To think we crossed this road less then 20 years ago with McSame and his S&L deregulation just mind boggles me. It was estimated it would take until 2010 to pay off the debt generated from that bail out then.

And McSame - 1 of the Keating 5 running for office to boot.

Just mind boggling

[RUMMYisFROSTED]

2. Let's see...

[Phred42]

3. How much have you got left?

:shrug:

[annabanana]

4. ding ding! . . . . . . .. n/t

[FreakinDJ]

5. Let’s face it – We ARE going to pay the cost

We have to live
We have families to feed
Everyone wants a descent life

So No – we are not going to just evaporate and go away like our manufacturing sector has under the Rat-publican “Off-shoring” policies. We are going to get by the best we can and continue to PAY TAXES.

The question being – “Why to we continue to be hood-winked into paying incredibly enormous debts generated by Washington lobbyist and Corporate Greed?

[lonestarnot]

7. Oh just about everything you own. How much you got?

[FreakinDJ]

8. I didn't lose my house

While everyone was running around getting ARM loans and buying homes WAY above their income potential, I bought a modest home on a fixed rate loan that I could afford even during bleak economic times.

Call me what you will - But I've seen this dance before

[lonestarnot]

9. Do you eat?

[FreakinDJ]

11. That is the concern now

I have a wife and 2 kids to feed and it is getting pretty ruff puting food on the table

Tube Steaks (hotdogs) on the grill has become our weekly "Fancy Feast"

Egg Flower Soup - made from watered down "$.15 Top Romen" with frozen vegtables and an Egg cracked into it has become a common dinner here

[Skink]

14. What should president Obama do?

What with Iraq to deal with and everything else. The republicans have never quite left a mess like this.

[FreakinDJ]

17. The consensus in the industry is REGULATE the industry.

Form an HONEST panel of industry leaders and congressional oversight to form Regulatory Laws to prevent this from happening again. Just as FDR did with the Anti-Trust Laws implemented during the 1930s as a result of the Great Depression.

Problem is Corporations doesn’t like playing fair and are willing to pay off Ratpublican Lawmakers to DEREGULATE our industries.

[mistertrickster]

25. Exactly right. The Banking Act (2nd Glass-Stegal Act) was repealed

in 1999 with a bill sponsored by Phil Gramm and which bears his name.

Mortgages could then be bundled and securitized in huge blocs creating a classic case of "moral hazard," those assuming risk were not those profiting from the deals.

The speculative housing bubble quickly expanded in the next five years and then popped--

just as it had during the Great Depression which is when the Glass-Stegal Act was passed to prevent housing bubbles in the future.

[depakid]

35. Sponsored by Gramm and voted for by Biden

and a lot of other corporatist Dems, despite warnings about EXACTLY what would happen.

[Virginia Dare]

6. Oy, get ready for 15 percent interest rates folks..

and massive inflation.

[SoCalDem]

33. We Boomers started that way.. I always knew we would "end" that way

There was never a chance that we would be allowed to "cash in" like the groups before us.. there are just too many of us, and even though we pre-paid, our elected officials spent all our money and put worthless IOUs in the piggy banks..

There are still a few shoes to drop....

401-ks morphed into 001-ks will be next

[NashVegas]

10. A Lot of Realtors Deserve to Lose Their Shirts, and Pants Too

In my market major realtors and developers spent gobs of money with the local media - newspapers, radio, and TV - to push their over-inflated boxes on the public, and they spent enough money that no one with access to a soap box dared to say the word, "bubble," without fearing for their jobs.

[FreakinDJ]

13. Too Bad the Realtors and Developers made out like Fat-Cats

Banks gave the Developers HUGE write downs and Realtors made huge commissions selling the ARMs

The Bush Crime Family Way - only you and me the little guy suffer

[NashVegas]

15. It's Like a Lesson From Teenage Drug-Using Years

"Try not to be the one caught holding the bag."

[WriteDown]

23. Are you talking about the banks...

taking a write down on their assets or a loan balance that has been written down. Two different issues.

[Festivito]

12. At least we can buy the stock back at really cheap prices.

Although, we've already funded them for more than we'd pay, way more. As a country, way way way way more.

[Dover]

16. LOL! Buffet the tycoon tells Mr.'populist' John Edwards to give back the small donations he took.

At the end of the article:


In other comments, Buffett said former presidential candidate John Edwards should consider returning small donations because he "misled" people. Edwards has admitted having an extramarital affair that he had earlier denied.

[ChiciB1]

19. Gee Whiz... Was It Necessary To Bring THAT Up Again??? Edwards Has

already been raked through the coals, unlike many others in Congress. I agree he "screwed up" big time, but he's NOT Evil Incarnate!!!

If truth were told I'd wager there are many, many others in Congress hiding dirty little secrets. And they presented themselves as "purity walking!" I realize I'm biased, but his message was one that extended to the working man. Flawed or not, he's not in a "class of his own!"

[Pastiche423]

28. His "message" was only rhetoric from the get-go

I am blown away by the DUers that still can not see that he was never more than a poseur. If he had truly cared, then he would not have closed down his anti-poverty center, nor his “College for Everyone” program.

But both were simply presidential resume enhancing for johnnyboy and not meant to actually help the people that needed it.

[krabigirl]

32. LOL.Sorry, Edwards doesn't have to return anything to anyone.

I laugh when I hear people say that. Yeah, I donated, so what? I don't expect to get anything back. Do people expect churches to give money back, for example, when some priest molests a little boy? (bad analogy, but still..)

[ChiciB1]

18. I'm Stupid... But Will This Affect Reverse Mortgages?? My Sister Somehow Found

out that she has a HUGE Balloon payment due in a couple of years and was considering a Reverse Mortgage. She refinanced her home around 2000 and was aware there would be a balloon, but her mortgage was sold 4 times and now it seems her 15 year loan actually turned into a 30 year loan. She thought her balloon was around $7,000.00, but when her interest payments weren't going down after 8 years she called and found out the balloon is really around $62,000.00! How can this happen? She's called quite a few people and they say there's NOTHING she can do, the mortgage shows the balloon payment is that high!!! She wonders if her ex-husband knew this, but regardless it's a mess and they had a MESSY divorce and don't talk!

She's freaking, but figured she has several years before she would consider the Reverse. She's divorced and will be 67 soon and knows she CAN'T come up with all the money!! Nor can she really borrow that much! With the housing slump here in Florida she wanted to hold off.

Anyone know anything about this??

[mistertrickster]

26. She shouldn't be responsible for anything that she didn't sign.

Find a good real estate attorney. 500 an hour is a lot cheaper than 67,000 dollars.

[ChiciB1]

27. She DID Sign... Ex-Hubby Initiated The Loan & Back Then Things Were Fine!

Unfortunately she assumed he KNEW what he was doing. I suppose she didn't because she trusted him.

I think she's stuck, that's why she was considering the Reverse. Now if Fannie & Freddie are in jeopardy she may be in BIG trouble!

[neohippie]

30. look into the FHA bailout loans ASAP

She needs to contact the FHA and try to refinance under one of the bailout loan programs for people who have loans that they can no longer afford.

[Baby Snooks]

20. "First Class Passengers report to the lifeboat deck...."

So it goes when a ship goes down. And so it will be with this and the rest of the disaster the Bushes and their "neo-con artists" including the Clintons brought all of us with their "new" economic theory of low interest rates and "happy days" for anyone who could manage to sign their name to loan papers. Low-interest rates in the end served them. No one else. It allowed them to monopolize markets through "leveraged buyouts" and then allowed them to start cooking the books to make it appear the economy was sound. Their economy was sound. They were ripping everyone off. With a little help from Alan Greenspan.

"But everyone is now a homeowner" some say. But half of the homeowners are probably going to lose their homes and the same vultures that financed the loans will buy the homes back in what has to be the biggest swindle of all time. The loan sharks are just better dressed than they used to be and some of them are listed on the New York Stock Exchange.

If you look at the boards of Fannie Mae and Freddie Mac since 1988 they are all "Bush Buddies" and that right there tells you what went wrong.

[FreakinDJ]

22. I was here at DU saying that in 2003

Basically was told to "pound sand" and quit listening to "Tin-Foilers"

There are 2 types of Money

Old Money - by where you monopolies and control markets and consumers in order to keep wealth. This is the type of money that uses market manipulation to force 100s of 1000s of home owners to lose their homes so they can swoop them up during the ensuing "Home Value Downturn".

New Money - by where you create New Markets through innovation and technology, a well educated, well paid work force that can consume the goods and products.

Guess which type the Ratpublicans support

[Hannah Bell]

29. not only them...

the plantation has its master & overseer.

[benld74]

21. dont need a billionaire to tell us that

[TexasBushwhacker]

31. Yeah, but when Buffet talks, people listen n/t

[libodem]

24. What the stimulus package

didn't pull the whole country out of this mess? Say it ain't so. It makes me madder than ever at the White House for pretending to the whole country that we were a $300.00 spending spree at Walmart away from economic recovery. Effing lipstick on a pig surge worked and the economy isn't tanking blowhards.

[BearSquirrel2]

34. And the secret is ...

And the secret is that all they are not insolvent because they made bad loans on property. They are insolvent because of all the outlandish fees they granted various players along the way.