Suspended Campaignation: McCain Hits the Panic Button
Filed under: Fannie Mae, John McCain, Presidential Campaign 2008, U.S. Economy, U.S. Financial Crisis
Sen. John McCain’s latest campaign stunt won’t beat out the Palin Gimmick for most transparent political move of this election cycle, but it shows again McCain’s propensity to abandon common sense when his polling numbers fall.
This afternoon, McCain announced he would suspend his campaign tomorrow morning due to the “financial crisis.”
My first question is, “John, could you just leave it in suspension until about forever?”
McCain claims the crisis is just too serious for life as he knows it to go any longer until Congress passes the $700 billion corporate give-away late this week or early next. Most laughable was what he said he’s going to do while he’s in a state of suspended campaignation. He’s going to get to work on the crisis.
Huh?
What the hell is John S. McCain going to do? The last time he got really involved in an issue that involved troubled lenders he and the four other Keating Five clan nearly lost their political careers. His campaign manager ran the lobbying operation for Fannie Mae, one of the biggest pigs at the public’s trough. Just two days ago the McCain campaign said he wasn’t even going to show up in Washington for the bailout vote unless it was so close they needed his ‘yea.’ In a fit of impetuousness last week, at the beginning of the current wrangling over the Paulson plan, McCain tried to look like a player and looked like Barney Fife trying to pull the revolver from the holster. Oh, and he wants Sen. Barack Obama to “postpone” their debate on Friday night.
Did I ask yet, “What the hell is McCain going to add to the scrum in Washington?” He’s already admitted that the economy is not his strong suit. There are not many other members of Congress in the House or Senate who are cozier with the K Street elite – that’s not what the other pols need for their PR campaign. There are about a dozen Bush Administration officials and Congressional leaders who will decide the legislative fate of the bailout bill – John McCain’s not one of them. What’s he going to do?
So, what changed today. Number one, the Bush Economy, for which McCain has been chief apologist for, (fundamentally strong economy) has hit home with voters hard in the last ten days. Obama is pulling away in the polls again. Florida is in play. The flash in the pan that is Sarah Palin is starting to fizzle. Number two: the panic button. Irascible John rolled out of bed today and punched it. When he hit that button, this bonehead move came out of the campaign machinery.
In the end, McCain’s attempt at high drama just looks like more of the erratic behavior for which his campaign has become known.
McCain would have us believe this is about a “national crisis.” What this is really about is taking America’s mind off of a flagging campaign.
Full Text: Obama Statement on Economic Crisis - Coral Gables, FL
Filed under: Barack Obama, Presidential Campaign 2008, U.S. Economy
(Source: Obama for America)
We are facing one of the most serious financial crises in this nation’s history. The events of the last week – from the failure of Lehman to the bailout of AIG to the continued volatility of the market – have not just threatened the trading floors and high-rises of Wall Street, but the stability and security of our entire global economy. Across this country, Americans are worried about whether they can make their mortgage payments, or keep their jobs, or ensure that their retirement is secure. Truly, we are all in this together. Read more
The George Bush Economy – Looks Like a Bailout for the Investment Class
The total silence on the economy and markets this week from the White House was finally broken today when President George W. Bush took to the podium – and said absolutely nothing of real substance.
Bush ran through the bullet points of what his administration has done to calm markets:
- Fannie/Freddie Bailout
- AIG Bailout
- Federal Reserve “adds liquidity” to the market
- Minor moves by SEC to step up “enforcement actions”
This is what he ended with – the reason he cancelled his travel today:
These actions are necessary, and they’re important. And the markets are adjusting to them. Our financial markets continue to deal with serious challenges. As our recent actions demonstrate, my administration is focused on meeting these challenges. The American people can be sure we will continue to act to strengthen and stabilize our financial markets and improve investor confidence.
Bush said, “Our financial markets continue to deal with serious challenges.” Yep, so serious it took you four days this week to speak up. “Challenges,” you say. A challenge is something one encounters that is unexpected, most often meant to be a difficulty not of one’s own making. People – or organizations – which overcome challenges are highly thought of; they’re the folks Americans love. The markets aren’t dealing with challenges. The markets are dealing with karma. Bad behavior, poor choices, and greed put “the markets” in the shape they’re in today. Bush also says his administration is “meeting these challenges.” After more than seven years, Bush is still full of it. The Bush administration is rewarding bad behavior and the entire country is paying for it, bailout by bailout.
The financial markets are no longer the playground of just the investment class. The financial markets add to or detract from the bottom line of nearly every American who has anything socked away for retirement. While nearly a trillion dollars of wealth was wiped out this week on Wall Street, Main Street suffered too. If you have money in a 401k or IRA or other investment vehicle, there is less in that account than there was a week ago. You paid for the unregulated free market. Every time the Bush Administration bails out another one of these pigs, or “adds liquidity” (borrows more money from China) you pay again.
It will be interesting to see what Bush, Paulson, Bernanke, Franks, Cox, and all the other politicians come up with on Friday and through the weekend to save the skins of a few more of their campaign contributors. Just remember, you’ll pay while the folks that got greedy wipe the sweat from their brows, say “Phew,” and enjoy another weekend in the Hamptons.
Sunday p.m. - Woodward’s new book, Fannie, Freddie, Prez Campaign, Pakistan
Filed under: Barack Obama, Bush Foreign Policy, Fannie Mae, Freddie Mac, Iraq, John McCain, Presidential Campaign 2008, Russian/Georgian Conflict, Sarah Palin, Terrorism, U.S. Economy
Bob Woodward’s New Book - WaPo Series Kicks Off
- Doubt, Distrust, Delay - Washington Post
- Spying on Iraqi Leader - Worth the Risk? - Washington Post
National & World News
- Palin’s politics and family mix - Washington Post
- U.S. unveils takeover of two mortgage giants - New York Times
- A tangled web with many masters - New York Times
- What the takeover means for your mortgage - Washington Post
- Bhutto’s widower elected Pakistani president - Washington Post
- Talibanistan - New York Times Magazine
- The vanishing Republican voter - New York Times Magazine
- Rival tickets are redrawing battlegrounds - New York Times
- Coming to grips with Russia’s new nerve - New York Times
- Hurricane Ike kills 59 on Hispaniola, headed for Cuba - Chicago Tribune
Paulson pulls the trigger on Fannie & Freddie
Taxpayers left on the hook for how much?
Noon Sunday
- Paulson lays out plan for Fan-Fred - Wall Street Journal
- Treasury engineers takeover - Bloomberg
- GSE takeover - Reuters
- Bernanke endorses move - Reuters
- U.S. unveils takeover of Fannie, Freddie - New York Times
Updated - News Coverage: Fannie Mae and Freddie Mac
U.S. Federal Government Takeover Imminent
Taxpayers Will Now Own the Billions of Dollars of Mistakes of Others
For an explanation of what are Fannie Mae and Freddie Mac see this post.
Google Finance FNMA, FRE Comparison Chart Year
News
- 8 p.m. Saturday: Government plan to hit shareholders - Reuters
- 6 p.m. Saturday: Bloomberg story updates with Barney Frank - Bloomberg
“This is no bailout, particularly for the shareholders,” Frank said. The federal government “will be senior to all shareholders, preferred and common.”
Holders of the companies’ corporate debt and preferred shares are “very unlikely to come out of this at all happy,” and the chief executive officers will be forced out, Frank said. Paulson met with Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron yesterday to tell them of the decision to put the companies into conservatorship, and remove the executives from their jobs, according to two people briefed on the discussions. - Bloomberg, Quotes from U.S. Rep. Barney Frank
- 6 p.m. Saturday: Loan Giant Overstated Size of Its Capital Base - New York Times
- Paulson readies the bazooka - CNN/Fortune
- U.S. to take control of Fannie, Freddie: Reports – Reuters
- U.S. rescue seen at hand for two mortgage giants – New York Times
- Questions, and hope, on plans for mortgage giants – New York Times
- Paulson Plans to take control of Fannie, Freddie – Bloomberg
- U.S. nears rescue plan for Fannie, Freddie – Washington Post
- U.S. nears deal on Fan-Fred – Wall Street Journal
- Obama says Fannie, Freddie too large to let fail - Bloomberg
Monday a.m. - Obama, McCain, Foreclosures, Fannie/Freddie, Oil prices
Filed under: Barack Obama, Fannie Mae, Freddie Mac, Iraq, John McCain, Ohio Economy, Presidential Campaign 2008, State of Ohio Govt, U.S. Economy
I called it last night …
- Oil rises on tropical storm, other news - Bloomberg
Look here.
- Obama arrives in Basra - New York Times
- Obama lands in Iraq amid troop pullout talk - The Times
- Minor parties a November wild card - Columbus Dispatch
- Some help on way for foreclosure crisis - Columbus Dispatch
- Editorial: To the Rescue - Columbus Dispatch
- Editorial: Taxpayer financed cars for members of Congress - Columbus Dispatch
If they were to make the switch to more economical cars, they could do what Ohio’s state government did and declare the Ford Focus the default car choice.
- Ohio’s unemployment fund on edge of crisis - Cleveland Plain Dealer
- After 2000 McCain learned to work the levers of power - New York Times
- Mideast faces choice between crops, water - New York Times
- Black, female, accomplished, attacked - Washington Post
Monday Evening – More Fannie, More Freddie; Afghan War; Useless Drilling; Mountain Lion
- Fannie, Freddie and You – New York Times
Clear- headed column by Paul Krugman points out that Fannie and Freddie operate under federal regulations that forbid them from buying subprime loans. So, how did we get to this point, Krugman writes in part:
Part of the answer is the sheer scale of the housing bubble, and the size of the price declines taking place now that the bubble has burst. In Los Angeles, Miami and other places, anyone who borrowed to buy a house at the peak of the market probably has negative equity at this point, even if he or she originally put 20 percent down. The result is a rising rate of delinquency even on loans that meet Fannie-Freddie guidelines.
Also, Fannie and Freddie, while tightly regulated in terms of their lending, haven’t been required to put up enough capital — that is, money raised by selling stock rather than borrowing. This means that even a small decline in the value of their assets can leave them underwater, owing more than they own.
- Barack Obama: My Plan for Iraq – New York Times
- Bush lifts executive ban on offshore drilling – Washington Post
Any oil production from new offshore drilling will come online and the oil into the market in about 10 years. This is a cynical, political ploy. The combined estimated production of U.S. offshore drilling and drilling in ANWR would barely dent our dependence on foreign oil or add enough oil to general supplies to make more than a minor dent in consumer prices. It’s past time to realize that we’re on the downward slope of the oil economy. Politicians who support this sort of drilling are either bought and paid for by the petroleum industry or offering false hope in order to get votes or create the appearance they are doing something.
- Militants breached U.S. base – BBC
- Tracker hunts Palo Alto mountain lion after attack – San Francisco Chronicle
Monday Afternoon - Obama and New Yorker, Mortgage Lenders
Filed under: Barack Obama, Fannie Mae, Freddie Mac, Journalism, U.S. Economy
- Eric Zorn: Will New Yorker Smear McCain too? - Chicago Tribune
- Obama: New Yorker Cover ‘Tasteless’ - Associated Press
I can’t even believe this made it through the editorial mill at the New Yorker. Recent polling has shown that there are tons of people who people who believe the B.S. that the magazine is satirizing. Add to that the fact that these issues - terrorism, Islam, patriotism - are super wedge issues. This cover isn’t funny, it’s not satire, it’s not fair.
- Cloud hangs over U.S. mortgage lenders - Reuters
Monday News … Fannie & Freddie, Obamas and New Yorker, Boccieri, Keno
Filed under: Barack Obama, Fannie Mae, Freddie Mac, Journalism, Ohio Economy, U.S. Economy
- Fannie Plan a `Disaster’ to Rogers; Goldman Says Sell (Update3) – Bloomberg
- Bernanke says plan will help consumers – Wall Street Journal
- New Yorker cover under fire – Boston Globe
- Uncertain fuel and materials cost and government contracts – Columbus Dispatch
- Keno starts in Ohio August 4 – Columbus Dispatch
- Cost of government in Northern Ohio – Cleveland Plain Dealer
- Spending study shows need for reform – Clevleland Plain Dealer
- Editorial: Bank regulators finally issue new rules to curtail shady lending – Cleveland Plain Dealer
- Boccieri, 16th Congressional District race getting national attention – Canton Repository
- Mortgage Giants Falter – Christian Science Monitor
Fannie Mae - Freddie Mac: Meet Federal Daddy-Mac
- Treasury Takes Steps to Bolster Fannie & Freddie - Washington Post
- Treasury Acts to Save Mortgage Giants - New York Times
- Treasury, Fed Affirm Backing for Troubled Mortgage Giants - Wall Street Journal
Fannie and Freddie and Main Street …
Reading the previous post and the following from the Saturday NYT may make you smarter or just wonder where the regulators (including Congress) are in all this. It would have been nice to catch this mess a little closer on the front end. The money which will be spent by the federal government on this mess coupled with that spent in the Iraq War could have been put to a more constructive use.
- How Fallout Could Affect Main Street - New York Times
What Is Fannie Mae, Freddie Mac?
As Fannie Mae and Freddie Mac are in the news – and will be as the U.S. housing market continues to melt down – it might be good to get a refresher or primer on just what these financial institutions are and what they mean to the marketplace.
Fannie Mae is the popular nickname for the Federal National Mortgage Association, or FNMA. Created in 1938 by President Franklin Roosevelt to provide credit and stability to a then-weak housing market, FNMA was re-chartered in 1968 as a share-holder owned company. Fannie trades in the New York Stock Exchange under the ticker symbol FNM. As of July 13, 2008 its price was $10.10 down $60.60 from its 52-week high.
Fannie’s corporate website describes its mission as “Our job is to help those who house America.” It also says of itself:
The government established Fannie Mae in order to expand the flow of mortgage funds in all communities, at all times, under all economic conditions, and to help lower the costs to buy a home.
At the core, Fannie’s ultimate purpose is to help along the liquidity – or amount of readily lendable cash – in the nation’s housing market. Its customers are not consumers, those who buy homes; its customers are the banks and other financial institutions in the secondary mortgage market. This secondary market is where home mortgages are bundled and sold before their maturity (oftentimes well before their maturity) as financial instruments with the underlying mortgages as collateral. Put simply, the secondary market is the buying and selling of home mortgages. What the seller or original holder of a mortgage gets from this is cash to go out and make another loan. This is a primary service of Fannie. FNMA is the leading ‘market-maker’ of this secondary market.
FNMA makes its money by charging fees based in this market. For example, Bank A has let’s say 100 mortgages. Fannie purchases that group of mortgages, bundles them into one financial instrument, a bond, and sells the bond to investors. Fannie guarantees the investors which buy these bonds – mortgage backed securities (MBS) – that that the principal and interest in the underlying loans will be repaid – whether the original borrower keeps up on the house payments or not. For the investors in MBS’s then, Fannie assumes the credit risk. The investors pay the fees.
With the proliferation of junk housing loans over the past several years, Fannie is holding onto more and more risk as the numbers of these loans rise in their overall pool.
FNMA’s origins are of the federal government, but the company is not backed by the federal government. Half of all home mortgages are owned or guaranteed by Fannie or its offshoot, Freddie Mac, the Federal Home Loan Mortgage Corporation. At the time Fannie was given a private charter by the federal government in 1968, it had a monopoly in making the secondary mortgage market. Freddie was chartered as a private corporation by the feds in 1970 to provide competition. It is also not backed by the federal government.
Freddie also trades on the NYSE under the ticker symbol, FRE. You can find Freddie’s corporate website here.
Note: This being a blog - and me not being a financial expert – I’d like to ask that if you are one, and see an opportunity to improve this post, please comment.
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