Bullshit Like this Comes Along Only Once in a Great While

I love calling bullshit. And this here Bloomberg article reeks of so much manure that calling it bullshit is an insult to bullshit. This bullshit is so grade A full-of-it that I think we need a new name for it. A name worthy of its magnanimous bullshit properties. Why, this couldn’t have come from a mere bull. This must be dinosaur shit or dragon shit or—wait a minute. I got it. This is Wooly Mammoth shit right here.

Bloomberg’s article is in bold. I’m in an air conditioned environment.

Fannie, Freddie Rescue May Cost Taxpayers $25 Billion, CBO Says

By Brian Faler and Dawn Kopecki

July 22 (Bloomberg) -- Treasury Secretary Henry Paulson's rescue package for Fannie Mae and Freddie Mac will probably cost $25 billion, the Congressional Budget Office said.

That’s your 25 billion dollars. Being used to bail out failed banks with government chartered missions. That means that your tax dollars are being used to clean up a mess that was created by the government in conjunction with major banks. In other words, it is your job to save the futures of a bunch of people who are much richer than you and fly in private jets. Seems fair.

``There is a significant chance -- probably better than 50 percent -- that the proposed new Treasury authority would not be used before it expired at the end of December 2009,'' the nonpartisan agency, which provides economic and budget analysis for lawmakers, said in a report today.

Pay close attention. This is the good news. There’s a fifty percent chance that you won’t have to feed the rich. This is, as the man always says, unadulterated bullshit.

Democratic lawmakers were seeking to determine the cost of Paulson's plan to offer emergency funding to Fannie Mae and Freddie Mac, which own or guarantee almost half of the $12 trillion in U.S. home loans outstanding. Paulson today said Congress understands ``the demands'' of the housing downturn and will likely approve this week his request to help the government- sponsored enterprises.

What are the demands of the housing downturn? New banks that won’t screw up? Less government forced regulation? Oh wait, it’s your money. Those are the demands.

``We need to act in the short-term because the GSEs are vital institutions in our capital markets today and are vital to emerging from the housing correction,'' Paulson said in a speech in New York. Fannie Mae and Freddie Mac are among the ``most interconnected of all global financial institutions,'' he said.

How are these GSEs (Government Sponsored Entities) vital? They literally sponsored and sold the mortgage backed securities that have been deemed worthless and left most banks high and dry. I fail to see the vitality. I see only failure.

Fannie Mae fell $1.61, or 11 percent, to $12.52 at 9:35 a.m. in New York Stock Exchange composite trading. Freddie Mac dropped $1.25, or 14 percent, to $7.50.

Paulson on July 13 asked Congress to grant the Treasury the power for 18 months to buy equity in Fannie Mae and Freddie Mac and expand their credit lines with the government after concern that the companies don't have enough capital sent the shares to the lowest in more than 17 years. Paulson also requested expanded powers for the Federal Reserve to oversee capital requirements.

Okay, so the government, which passed the Community Reinvestment Act, which forced lenders to offer loans to people who couldn’t afford to pay them back, which led to the worst housing market since The Great Depression—these are the guys we want to give more regulatory control to? These are the guys who are gonna save us from themselves? The mere concept is so fucking ridiculous that the fact that mainstream media isn’t even questioning it has me convinced that the government owns every media outlet in the country.

Imagine, if you will, going to a doctor because you’re sick and you don’t think your body is getting enough oxygen. Imagine then, that said doctor then does something scientific so that your body gets so much oxygen that one of your lungs malfunctions (stay with me, I ain't no doctor). Now, imagine going back to that doctor only to have him tell you that he can fix the problem but he’ll need a lot more money and more control over your everyday life. Why would you stay with that doctor? You would not. You would go somewhere else. So why do we let the US government keep screwing us over?

To quote Homer Simpson, “’Cause [we’re] stupid, Lisa. That’s why everyone does everything.”

Political Pressure

The cost of the plan will depend upon terms of the credit, whether the companies have to put up collateral, pay fees or commit a portion of profit to the Treasury, said Marvin Phaup, a CBO economist for almost 20 years who retired in 2007 and is now a research scholar at George Washington University in Washington.

``This is a very very difficult thing to do and of course the political pressure will be great to make the cost estimate zero,'' Phaup said in a telephone interview last week. ``You can make a reasoned argument that it will be zero with some probability, but of course, it's also with some probability it could be very costly to taxpayers.''

It might be expensive. It might not. Your lung may explode. Or everything could be fine. Who the hell knows? Life is tough. What. I’m supposed to know everything, here?

Neither the Treasury nor the White House budget office has estimated publicly the cost of the bailout. Paulson has said the plan would restore investor confidence in the companies and thereby pose little cost to taxpayers.

Paulson is full of shit.

Lawmakers have negotiated with Paulson over the details, with the goal of putting the package to a vote in the House of Representatives tomorrow. The Senate would also need to vote.

Is it really a negotiation when everyone has the same agenda? Seems to me that’s more like collusion.

The Federal Reserve is talking with the Office of Federal Housing Enterprise Oversight, the regulator for Fannie Mae and Freddie Mac, to determine whether the companies have enough capital to offset credit losses.

In a purely capitalistic society, to determine asset value, all they would have to do is count cash. Nowadays though, it’s all about overvaluing, overstating and straight up lying. What a time to be alive.

More Market Stress

``The Federal Reserve is working with Ofheo to get a better understanding of the issues facing the GSEs,'' Fed spokesman David Skidmore said. The New York Times earlier reported that the Fed and the Comptroller of the Currency are examining the books of Fannie Mae and Freddie Mac to evaluate their health, citing an interview with Paulson.

Paulson said the Treasury has no plans to execute the financial backstop plan, and added that before doing so he would consult with the Congress and the companies. Paulson said financial market turmoil will take ``additional time'' to be resolved and that progress ``won't come in a straight line.''

``Until the housing market stabilizes further, we should expect some continued stresses in our financial markets,'' he said.

Jeez. You think? You think people not being able to keep banks alive will affect the economy? What school did you go to again? Wherever it is, my kids are definitely going there. Douche.

Savior No More

The Bush administration is depending on Fannie Mae and Freddie Mac to help pull the U.S. out of the worst housing slump since the Great Depression. The companies, which buy mortgages from banks, face mounting credit losses stemming from the collapse of the subprime-mortgage market.

So The Bush Administration is depending on two nearly bankrupt companies to bail out a nearly bankrupt industry with government funds, which are actually tax payer dollars, which is actually our money, which means, to me, that this plan is really stupid.

Freddie Mac may cut purchases of home loans from banks and bonds backed by housing debt to shore up its capital amid record delinquencies.

So, to save their business, Freddie Mac will stop doing business. This is definitely a company that I want bailing me out.

Freddie Mac, which last week registered with the U.S. Securities and Exchange Commission for the first time, is also considering selling securities and reducing its dividend while it prepares to issue $5.5 billion of stock. JPMorgan Chase & Co. analyst Matthew Jozoff said last week that growth in the mortgage holdings of Freddie Mac and Fannie Mae will be ``weak.''

I have no problems with the above paragraph. It is the only one in the entire article that makes sense and uses facts. Savor it. Because this gets worse.

``This just means much less credit availability for mortgage borrowers,'' said Paul Colonna, who manages more than $100 billion as chief investment officer for fixed income at GE Asset Management in Stamford, Connecticut. ``They were teed up to be saviors of the mortgage crisis, but now they've got their own capital issues.''

So, uh, you sure we want to put them in charge of this bailout? Seems a little… uh… what’s the word? Fucking dumb. That’s it. Actually, it’s two words. But you get the point.

Mortgage Losses

Combined losses at the companies will probably total $48 billion through 2009, Jozoff said in a July 18 report.

``Mortgage losses are significant, and will probably foster capital conservation from the agencies rather than portfolio growth,'' he said.

In English, Jozoff is saying, “I don’t see how these guys can make money in a shit economy with shit assets on their books.” English is a fun language.

House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, has said he agrees with Paulson that the cost of a rescue would be insignificant.

What’s tens of billions of dollars amongst friends, anywho?

Lawmakers will probably cap federal aid by counting any liabilities against the government's debt limit, Frank said. Such a safeguard may reassure lawmakers concerned about taxpayers' exposure to losses, he said.

Ah. This is freaking Mafioso style management here. Can’t you just see Tony Soprano saying, “Fannie, Freddie, your debts are now ours. We now own your businesses.”? How long until the US Government just busts us all out and takes all our businesses?

Minimum Capital

Fannie Mae, created in Franklin Delano Roosevelt's New Deal plan, and Freddie Mac, started in 1970, have the implicit backing of the U.S. government and get access to funds at lower rates than banks, became more indispensable this year after private providers of mortgages collapsed or were acquired.

The game is rigged in their favor and they still lost. They get access to funds at a lower rate than the rest of the country and they still lost. And the government wants to give these guys more money? Am I the only one who thinks this is stupid? Please say, no.

At the end of March Freddie Mac had $6 billion more than the minimum capital required by its regulator, and Fannie Mae had surplus capital of $5.1 billion. The companies already raised $20 billion in the past year to cover losses and meet Ofheo rules.

Freddie Mac will probably report a surplus exceeding the minimum 20 percent required for the second quarter, according to a company filing with the SEC last week. The SEC registration and equity raising will allow the company to reduce its capital surplus level to 10 percent.

I love this. The capital reserve rules are too stringent for Freddie and Fannie so they lower them because they may report (read: lie) that they have enough capital. So, the company is still weak; the threat of failure is still there. But at least they're not violating any rules, which they seem to set. Which makes this whole game seem... what's the word?

Rigged. Rigged is the motherfucking word.

Fuck!