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Posted
Oct 19 2009, 11:33 AM
by
Kim Peterson
Rating:
Money Blog: Top Stocks Blog - MSN Money
If you own shares of Fannie Mae (FNM) or Freddie Mac (FRE), you're sitting on a whole lot of nothing, according to analysts at Keefe, Bruyette & Woods. The analysts cut the price target on both stocks to zero and downgraded them to underperform. In order for these mortgage giants to survive, the analysts said, they need to be recapitalized from the banking industry. But even if that happens, their common and preferred stocks will be worthless. The government has funneled $98 billion in capital into Fannie and Freddie, according to MarketWatch.
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Posted
Sep 25 2009, 08:04 AM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
This article is written by Minyanville's Ryan Goldberg
Home sales fell last month, and so be it. Every home that doesn’t get sold is another bailout I don’t have to finance. (See "Home sales drying up.")
Congress included an $8,000 tax credit for first-time homebuyers as part of the stimulus package passed last winter. As many as 40% of all homebuyers this year will qualify for it, and it’s expected to cost the government $15 billion -- more than twice the original forecast -- thanks to its popularity.
Bing: More about the homebuyer tax credit
The tax credit is scheduled to expire on Nov. 30. Not surprisingly, the real estate industry, including the 1.1 million-member National Association of Realtors, wants Congress to extend the credit at least through next summer, and to expand it to $15,000 and allow all buyers to qualify. The cost: $50 billion to $100 billion.
This is a redistributed tax from renters to buyers. As a proud renter, I’ve had enough.
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Posted
Sep 17 2009, 11:57 AM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
This article is written by Minyanville's Andrew Jeffery
Federal Reserve Chairman Ben Bernanke may have kept his job for another four years, but that doesn’t mean it’s going to be any easier than the last four.
With pundits, politicians, and regulators sounding the trumpets that our latest bout with recession is likely behind us, central banks and Treasury Departments around the world are looking forward at the daunting task of removing the various forms of stimulus -- which, in the estimation of former Merrill Lynch economist David Rosenberg, have contributed 100% of global economic growth this year. See "Staying Neutral on Inflation vs. Deflation."
European Central Bank Chief Jean-Claude Trichet even took out space in the Financial Times to lay out his vision for the eventual withdrawal of “enhanced credit support,” which helped prop up local, and indeed global, financial markets.
Here at home, Bernanke’s much maligned predecessor, Alan Greenspan, is voicing concern that Congress could complicate the Fed’s already delicate task of keeping the economy grinding ahead without waking the sleeping giant of inflation.
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Posted
Sep 11 2009, 04:12 PM
by
InvestorPlace
Rating:
Money Blog: Top Stocks Blog - MSN Money
This article was written by InvestorPlace's Jim Woods.
Cash for Clunkers; you've got to admit it's a catchy phrase replete with alliterative genius. The creativity here is especially surprising, given that the name was likely concocted by a government bureaucrat. I guess it's not surprising that any government program with the word "cash" in it is going to draw some attention. I mean, who doesn't want to get some cash back from the government?
So, in honor of this paragon of government generosity, I propose that we extend the "Cash for" program to a few other sectors of the economy. I mean, why should the auto industry be the only one to benefit?
Bing: Latest on "Cash for Appliances" program
After all, if giving cash away for broken-down cars works, why not apply that same logic elsewhere? So, without further ado, let's take a look at a few sectors that could use a little government stimulus.
WARNING: Readers lacking a sense of satire may want to proceed with caution.
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Posted
Sep 01 2009, 01:25 PM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
In a dramatic shift, investors are shying away from the riskiest assets and the most speculative stocks. The huge rise in the likes of AIG (AIG) and Citigroup (C) had the trappings of a short-covering bull rally on its last legs. Now, the financial sector appears to losing the market leadership role that powered the broad market higher.
After regrouping and counting casualties, the bears are on the counterattack. AIG is down 24.3% over the last two days while Citigroup has lost 10.1%. Government controlled mortgage lenders Fannie Mae and Freddie Mac are down 19.1% and 17.9% respectively.
The catalyst appears to be a downgrade of AIG by a Sanford C. Bernstein analyst and downgrades of Fannie and Freddie by FBR Capital Markets analysts. But the signs of an impending turnaround have been building for weeks.
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Posted
Jul 09 2009, 11:10 AM
by
Catherine Holahan
Rating:
Money Blog: Top Stocks Blog - MSN Money
 Billionaire investor Warren Buffett has joined the chorus of prominent political figures and businessmen calling for a second stimulus.
The CEO of Berkshire Hathaway told ABC's Good Morning America that the first $787 billion stimulus didn't do enough to help the economy and included too many earmarks for politicians' pet projects.
"Our first stimulus bill . . . was sort of like taking half a tablet of Viagra and having also a bunch of candy mixed in," Buffett said in the interview, "as if everybody was putting in enough for their own constituents."
The call, one of several Buffett has made in recent weeks, came after Buffett had praised the Federal Reserve's efforts to pump money into the economy in interviews on CNBC and Bloomberg television.
It also followed comments by officials in President Barack Obama's administration maintaining that the government would continue a second stimulus should the economy continue to deteriorate. However, the administration said it is not currently discussing a second aid package.
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Posted
Jun 04 2009, 05:57 AM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
Despite the best efforts of the Federal Reserve and the Treasury Department, the free market is winning the battle over mortgage rates. Tens of trillions of dollars in support for the financial system can't change the stark reality: Giving out home loans remains risky business.
Borrowers looking to take advantage of rock-bottom interest rates are seeing the opportunity slip through their fingers, as rates have risen by more than 0.50% in the past few weeks.
According to the Wall Street Journal, the pop in rates is due to expectations of economic recovery, combined with fears that the mounting pile of debt incurred by Washington's central economic planners may not be sustainable. As the government prints money and plunges the country into an ever-deeper deficit, holders of U.S. Treasuries (e.g. China) are getting skittish. These investors are quietly demanding a higher return on their bet that our economy will pull out of its current tailspin.
This, in turn, is pushing up mortgage rates, which doesn't bode well for nascent signs of recovery. Big lenders like Wells Fargo (WFC), Bank of America (BAC) and JPMorgan Chase (JPM) -- despite offloading nearly all default risk to taxpayers via Fannie Mae (FNM), Freddie Mac (FRE), or the Federal Housing Administration -- are asking prospective borrowers for hefty points up front to get the lowest rate possible.
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Posted
May 08 2009, 01:28 PM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
Just when you thought it was safe to go back in the water... Subprime lending has come roaring back.
But this time, reckless financial innovation isn’t being hatched on Wall Street. Instead, state governments are angling to “monetize” first-time homebuyer tax credits so borrowers can purchase homes with little or no money down.
If this sounds eerily similar to the type of lending practices that got us into this mess, well, it should.
The federal government, as part of the recently passed economic stimulus package, will refund first-time homebuyers up to $8,000 if they meet certain eligibility requirements. The program is frequently cited as one of the myriad reasons a bottom in the housing market is imminent.
Critics, however, argue that rebates don't end up in a buyer’s pockets until his or her 2009 tax returns are filed - even though rebates are credits, not just deductions.
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Posted
Apr 15 2009, 06:35 AM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
Who knew that working for a quasi-nationalized bureaucratic nightmare -- with the added bonus of becoming a national scapegoat -- was such a lousy gig?
At Fannie Mae (FNM) and Freddie Mac (FRE), high-level employees are leaving in droves, and replacements are proving to be few and far between. According to the New York Times, candidates are turned off by heavy scrutiny and the burden of having to answer to over 300 million taxpayer-shareholders.
Fannie is on the market for a general counsel, chief risk officer and chief technology officer; Freddie, on the other hand, is truly a rudderless ship, currently managing a cool $6 trillion in mortgages without a chief executive officer, chief financial officer or chief operating officer.
The Obama Administration faces an ongoing challenge: Finding knowledgeable financial professionals willing to take on the truly thankless job of cleaning up after the orgy of financial greed and excess of the last two decades.
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Posted
Apr 13 2009, 09:03 AM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
It looks like our 535 finance ministers who moonlight as members of Congress want to further extend their control of the nation’s banks.
Congress is in a snit because some banks that received federal funds through the Troubled Asset Relief Program (TARP) jacked interest rates and fees.
“The people who are subsidizing the activities of the banks through their tax dollars are the same people who are furnishing the high profits through consumer lending,” Elizabeth Warren, chairwoman of the oversight panel appointed by Congress to keep an eye on federal bailout funds, told the Wall Street Journal. “In a sense, we’re asking taxpayers to pay twice.”
The banks say the increases, even for low-risk customers, are a reasonable and legal way to recover some of the cost of bad loans that still clog their books.
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