Apples to oranges. Commercial Real estate is a revenue generating property. It requires a lot more up front capital, higher borrowing restrictions (credit score, escrow reserves) long term leases with deep analysis of potential revenue cash flows, greater transparency into default rates based on property potential to continually generate cash flows to cover loan payments.
you know the ones they bought from FNMA...it is almost comical.
GOVT: FNMA shouldn't be allowed to recapitalize so we implemented the net worth sweep to pay back tax payers and protect them.
GOVT: FNMA may need another bailout and tax payers once again suffer the big bad FNMA
How is the mass media not all over pointing out the shell game the government is playing. For or against FNMA is irrelevant. This is like a Madoff Ponzi scheme.
It is positive for longs in the fact that they use the word "RAID FNMA" and points that the sweep was implemented to protect tax payers and directly related to the bailout, but in fact it is being used as an unregulated cash infusion into the government.
No the bill is not pro FNMA, but the bill highlights points that are pro FNMA in a court room.
Status quo? there is none, that's why there are several different bills and none have enough support to move forward and why we have no resolution after 7 years.
Speculative investing is perfectly fine, high risk high reward. But that should and is not the business of our government. Yes they provided a bailout and for that they deserve compensation, but not indefinitely and certainly not at the expense of breaking or at the least bending the letter of the law for financial or political gain.
Most tax payers would never get past the headline, Gov't bailout of FNMA returns XXX billion in profit. They would certainly be happy. They should also be happy because like it or not the fact that FNMA has the unique Private and Gov't duality is what allowed the government to put them in conservatorship to shoulder the burden the past seven years and keep liquidity and return housing market around in such a small amount of time.
Yes the government should cash out now. 1 Guaranteed return. 2. No way this last 10 years but for argument sake ok 10 years. 3 Sentiment is good but unknown (is unknown tax payer risk) but lets say 10 billion a year to 16 billion a year, that's 120- 160 billion. (Speculative) That's the same as they would make selling their shares as part of original agreement,
You want them to be government owned and run. Ok, sure but when a company (in this case Gov't) takes over a company they have to buy them out. Facebook, Google, Microsoft have all bought out companies...for billions they didn't just take them. And if what ever hate you have for FNMA you are ok with that, I feel sorry for you.
Your proposal is the last thing from simple. You are speculative investing with tax payer money. This is a very risky proposal you are making. One there is no way that housing reform what ever shape it takes is going to sit back for another 10 years in Limbo. 2. 10% of what, if you can predict the future earning for 10 years and guarantee 10% will make more than cashing out now??? why trickle in a couple a billion a quarter, when you can cash in now and guarantee to be paid back in full with a 100% profit on top.
The government should not be acting as a hedge fund looking for maximum return, they should be looking to be conservative and take a very substantial win off the table while preserving liquidity in the market.
I know this post does not sway anyone to change their opinion, but baffling that no one has asked or stated the simple solution and move on from wasting more time that could be spent on so many other issues.
Returning the Sweep and Capitalizing them makes the governments Preferred and Warrants (I know people disagree on warrants still being good or not but for argument sake) worth a fortune. They could walk away with between 300 - 400 billion and FNMA would have a 200 billion Cap Reserves Account out of the gate and could be mandated to increase that to create a huge Cap Reserve Requirement that protects tax payers. Add on additional regulation just as Dodd Frank and Basel I II III were placed on Financial institutions.
Yes that would be you. You are shorting a stock that is 2.80. So max you can make is 2.79 per share. Where if it moves up, you could be in the hole for an infinite amount Only an idiot would perform some risk analysis and think this is a good investment. The high interest your broker will charge you, probably would get you to break even at best.
Except for every single person who currently has a 30 year loan and their house value was based on the 30 year loan. So now every person in a 30 year is underwater. Sounds like a great idea.
Whether you are for or against FNMA. Whether you hate Wall St and Hedge Funds Whether you believe or don't that FNMA were major contributor to housing crisis is irrelevant now. I believe the people hate government abuse of power over anything else. And the recent press clearly shows there was government abuse. Still need to wait and see how it plays out in court, but public opinion is on FNMA's side
The fact that the US budget and debt ceiling are reliant on the money from FNMA should outrage all taxpayers. They have been told that the government through bipartisan deals have reduced spending and cut budgets They used FNMA in part to accomplish this. Even if the sweep is not found to be illegal, which it clearly is, the government has used a temporary unreliable cash flow source to falsely lead the public to believe our country's financial state is better than it is.
It has taken a long time but think we are finally seeing the main stream press highlight this fact. While there are a lot of legal issues around HERA, 3rd Amendment, Presidential Disclosure etc, the simple truth, that is not a matter of law but a matter of deception on the part of our government will play a crucial role in FNMA's future.