It was John Paulson who made the $700 million gift to Harvard, not former Treasury Secretary Hank Paulson.
So you just built the perfect rationale to explain why the government is entitled to so much more than just the return of the $180 billion. In chess I think this is called a "fool's mate". Right? You just mated yourself.
Baloney. A loan is called a loan and has specific payback requirements. The sad fact is that the Treasury has stated they doubted Fannie would ever be able to pay back the money they were bailed out with. That isn't a loan that simply gets paid back and life goes on. This was a rescue.
So, then, you are claiming that the U.S. government has no further risk or exposure under any future scenario? Gee, I thought they guaranteed something like $150 trillion in MBS. And to think, the same fools that want to restore FnF also want to dismember Dodd-Frank and return the mortgage landscape back to the days of The Wild West.
Who'd of thunk it?
Fannie and Freddie did not cause the crisis. I agree. They were victimized by TBTF banks and by government meddling in their mission, well prior to conservatorship. But it is an indisputable fact that in the sub-prime collapse and liquidity crisis in September, 2008 that if FnF had failed and gone into receivership that the U.S. government, its taxpayers and the entire banking system would have spun into a death spiral, precipitating the next Great Depression. This extreme vulnerability for all American citizens is why the government took extra-ordinary measures to prevent a cataclysm.
It's very "convenient" in 20/20 hindsight to critique their actions now. But it's not very smart to do so considering the outcome if they simply kicked the can down the road and did nothing.
Gee, I must be confused because nowhere in Judge Wheeler's ruling did I see him award any Takings Clause compensation. How much did he award AIG shareholders? How much did they get?
In the Wikipedia write up on the AIG takeover, it clearly states they were bankrupt. Paulson in his book stated they had "hours" to go before entering default. But you claim to know better, so kindly enlighten us all by naming the suitors that were cued up to give AIG the same $85 billion that the New York Reserve Bank provided them within hours of AIG's Board approving the deal. Make sue that in your reply you confirm the other suitor's ability to also provide the approx. $100 billion in additional ballout money that the U.S. also advanced AIG to restore them to solvency. Please also feel free to comment on why AIG had to sell off so many assets in order to settle its TARP debts with the Feds.
This ought to be good! Waiting...
henleywm, I came across your condemnatory post and felt a reply from one of the negative posters you villainize was appropriate. This message board, in its heyday, averaged 200-300 messages per day and was one of the most active YMB's in the blogosphere. It was 90% populated by Walgreens pharmacists who dominated all discussions with the Three Monkey mantra of "See no evil, hear no evil, speak no evil." Robbsbeach, milo_hansen and myself committed the unpardonable sin of daring to occasionally observe that the emperor had no clothes on. Those observations were pretty easy to find and disclose during the Jeffrey Rein era. The personal attacks on all of us... childish, crude, mostly bathroom humor-level... led us to go to another board. Prior to us leaving, all our posts became more negative as retaliation for the insults heaped on s by you and your cronies. Rather like I suspect Robb's comments on this board may remain more polarized since his return here has led to the same kind of revulsive behavior. I, for one, don't blame him for reacting negatively.
When we left YMB, the discussion elsewhere was NOT negative towards Walgreens. It was balanced. I actually went long the stock and sold after the WBA deal was announced. The WAG board on iHub was rated among the best by board readers and rarely suffered a message deletion, unlike this WAG board where all the message and ID deletions were great sport, celebrated unabashedly by many of you jerks.
Personally, I am now out of the sector and, no, I am not returning here for comments of a positive, neutral or negative nature. But I would urge you to consider how you relate and react with other posters whose views you do not share. Simply condemning them only leads to exactly what I now see on this message board...
no content, no investment-grade information and no posting activity.
I actually agree with Tim Howard's assertion that the AIG and FNMA cases bear scant correlation with one another. I do think the one transferable lesson from Wheeler's decision is the conclusion that government's failure to act at all could have been ruinous to shareholders. I suspect that in the Fannie and Freddie cases, the impact of government inaction would have been far-reaching, including an economic depression affecting Americans for decades.
This board bogs down in endless and occasionally mindless debate over all these micro issues of alleged wrongdoing by the government. None of these are smoking guns suitable of inspiring a guilty verdict. In the macro sense, it matters little that the government made mistake on GSE's backing sub-prime MBS. It matters little that government maybe over-reached in seizing the GSE's (or AIG). What matters is that the government acted swiftly and pre-emptively to stave off a collapse of the country's economy.
I do not believe any damages will be awarded FNMA shareholders. It is possible that the warrants could be canceled since they were not already converted and shares sold off as what happened with AIG. Were this to happen, I believe the government will simply stop backing the GSE's and both wlll cease to exist. Remember that the ultimate goal of many in Congress is to exit the government's role in any aspect of private enterprise.
Judge Wheeler awarded no damages because, as he concluded, "If the government had done nothing, the shareholders would have gotten 100% of nothing."
Damages are only awarded when losses occur. The downgrade of AIG's credit rating due to underwater sub-prime mortgage paper is well documented. Years of accounting scandals had rocked the companies credibility in both investment and banking communities. The company was fined over $1 billion for its shenanigans. And moving into credit default with no reinsurance in its London office created a $60 billiion shortfall in required liquidity.
Hank is appealing the decision. I think he will fare worse in the appeal.
Could it be because they don't have deep pockets like the U.S. Government?
I thought so. Litigation of opportunism. I THOUGHT SO.
Tim Howard stated the reality very well when he said comparing the AIG case to the various Fannie cases was "inapt". Actually, I think he could have used "inept" interchangeably in his comment. None of the judges in any of these hedge fund cases can assess penalties because the BoD's approved these arrangements. That makes them legal, in a purely simplistic way. So the judge can say it was a raw deal, the judge can say it was tantamount to a "taking" or express whatever outrage is appropriate from a Federal Justice's bench. But you cannot punish the government for exercising rights that were authorized by the shareholder's authorized Boards, proper, improper or somewhere in between.
Well, Sam, ultimate accountability actually lies with Frank Capra who so demonized Mr. Potter in "It's A Wonderful Life" that mortgage banking reform became the mantra of the New Deal generation. FNMA is a dinosaur and relic of the depression. The government does not belong in private enterprise.
Naw, Sam, let's give proper credit to George W. Bush. He set all this stuff in motion after creating the recession in the first place. Maybe Hillary can provide the final fix.
Judge Sweeney doesn't have a case against anybody that has been cited as a defendant in any of these litigations. The only party that could be charged is the former Fannie Mae Board of Directors.
Conservatorship was approved by the Board of Directors and ceded all such decisions to the U.S. Treasury and FHFA. They implemented the sweep. Got a problem with that? Initiate a class action suit against pre-conservatorship FNMA and their Boar of Directors for doing the deal. You can't sue the U.S. government for choosing actions that FNMA's board decision legally empowered them to make.