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Barney Frank Rebuffs GSE Reform Efforts, Says Fannie And Freddie Bondholders Will Not Be Made Whole

Tyler Durden's picture




 

The latest update in the ongoing GSE drama comes from Barney Frank who during a conference of black, Hispanic and Asian Realtors
in Washington said the following: “Please don’t think this is federally guaranteed, I don’t
think it is, I don’t think it should be, I don’t feel any
obligation to bail you out.
” Well, that comes almost two year two late after the government already made all GSE lenders whole. Barner's posturing is merely in response to Republican efforts to account properly for GSE liabilities which, courtesy of their conservatorship status, are explicitly backed by the government. Of course, should the GSEs be put on the budget, the US debt/GDP, as pointed out previously on Zero Hedge, would surge by nearly 50%, from 90% to 140%. But Barney Frank, just like Peter Orzsag, is all about semantics.

Bloomberg reports:

A “whole range” of options is being considered for
investors in the two government-seized companies, “from paying
nothing to a haircut to whatever,” Frank said.

Representative Scott Garrett, a New Jersey Republican, is
pushing legislation that would bring the companies’ debt
obligations onto the federal budget, which Frank said would
result in explicit government backing.

“We’re not remaking Fannie and Freddie,” Frank said.
“We’re going to start from scratch and do housing finance.”

So the government is intent on "strating from scratch and do housing finance." This is troublingly along the lines of a Barney Frank proposal of redoing housing from politicians who can't read good and want to regulate all other stuff good too. Will someone please send Mr. Frank Seth Klarman's lessons not learned from the financial collapse: it appears the government is still hell bent on doubling down on its all in wager with the economy, in futile hopes that Keynesianism will make everything ok at the end of the day. In the meantime, with the UK buying US debt, and vice versa, everything is proceeding exactly as the Fed has foreseen.

 

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Fri, 03/05/2010 - 12:00 | 254839 bugs_
bugs_'s picture

Wow!  He told the "Black, Hispanic and
Asian" <racist> Realtors that?  OMG!  I
wonder if they believe he isn't serious
and he is just leftist code talking to
mollify stupid constituents before the
pivotal election?

Did they wink at each other knowing the
flow of free money will continue their
way?  Or do they have a nagging doubt
that perhaps the tide has really turned
in DC?

Fri, 03/05/2010 - 12:02 | 254842 Hondo
Hondo's picture

the markets don't believe him at all.  He along with the rest of congress have zero credibility until they actually let the bond holders choke on the paper.........when they do that then and only then will i believe.

Fri, 03/05/2010 - 12:14 | 254844 hedgeless_horseman
hedgeless_horseman's picture

Please don’t think this is federally guaranteed, I don’t think it is, I don’t think it should be, I don’t feel any obligation to bail you out.

Stop it Tyler!  My brain can't take the full Barney.  I think I just suffered some kind of embolism.

Although, it may have been caused by the banner ad at the top of this thread:

http://www.buycaliforniabonds.com/

 

Fri, 03/05/2010 - 13:09 | 254952 Mad Max
Mad Max's picture

Yes, that ad is both disconcerting and ironic on ZH.

Fri, 03/05/2010 - 12:13 | 254856 jedwards
jedwards's picture

I don't think it matters whether or not it's put on the budget.  I don't think anyone cares at this point.

 

George W didn't put the Iraq/Afghanistan war costs on the budget either.  Seems like all politicians do that.  Wasn't Bush the one who guaranteed the GSE debt in the first place?  (I'm not an Obama supporter, I hate all politicians equally).

Fri, 03/05/2010 - 12:17 | 254862 crosey
crosey's picture

"Frank"ly speaking...he may lose his power this fall.

Fri, 03/05/2010 - 18:38 | 255525 Anonymous
Anonymous's picture

This guy (Earl Sholley) http://sholleyforcongress.us/
is running against Barney Frank - send him some $$.

Fri, 03/05/2010 - 12:21 | 254867 Anonymous
Anonymous's picture

I personally think he's all about dudes.

Fri, 03/05/2010 - 12:23 | 254870 rich_maverick
rich_maverick's picture

Just like Greece, things don't matter until they matter.  Everyone knew Greece was over it's head in debt.  Just that now, bond holders are not accepting taking on the risk.  What would American be any different?  Unfortunately, America is too big to be bailed out!

People are well aware of the mess we are in.  They just don't think that it's a problem because so far, nothing horrible has yet happened.  This is equivalent to someone falling off a tall building, and half way down thinking, hmm... so far so good!

The issue here is that we have so many investors on the hook with US government debt, implicit or otherwise.  When they start the mass exodus, it will create a wave of panic.  China has already acknowledged that it fears that if they were to sell their US Treasuries, it would spark a panic selloff before they can fully unload.  How is that a "vote of confidence"?

Unfortunately, guys like Barney Frank are part of the problem here.  The US economy would be better off if we had Barney the Purple Dinosaur running things in his place.  In fact, if we replaced all the politician in Washington with characters from Sesame Street, the world would be better off.   But, we should be so lucky!

 

 

Fri, 03/05/2010 - 12:24 | 254871 TraderMark
TraderMark's picture

Dear Barney

"You lie!"

Fri, 03/05/2010 - 12:24 | 254874 Bruce Krasting
Bruce Krasting's picture

It took a while but we have gotten rid of most of the private sector bad apples that caused all of our problems. The managment of Fannie and Freddie are gone. The heads of Citi Merril,BoA and a bunch of others are gone.

But Barney Fife Frank hangs in and has his hands on the future of the Agencies. This is crazy. He, more than any individual in Washington is responsable for the mess that we are in. If his hands are on the tiller, it is certain that we will crash on the rocks. The only question is when.

Fri, 03/05/2010 - 13:31 | 254919 Howard_Beale
Howard_Beale's picture

Bruce--you make some very good points.

But this is totally insulting to Barney Fife. TV Land is running Andy Griffith show reruns and I am once again reminded that Barney Fife showed great heart and a brilliant lack of control of a handgun. He was the most wonderful character on the show, except maybe Ernest T Banks.

How about that big purple Barney instead to coin a name for Barney Frank? Much more appropriate since he had a very limited vocabulary and annoyed the entire planet except some young children. Call him Barney the Purple Dinosaur Frank.

Here's a picture of Dodd, Frank, and Nancy Pelosi:

http://pbskids.org/barney/

 

Fri, 03/05/2010 - 14:15 | 255068 Anonymous
Anonymous's picture

It's me, It's me, It's Ernest T.
Ernest T. Bass

Fri, 03/05/2010 - 12:27 | 254876 Anonymous
Anonymous's picture

Barney isn't all about semantics, he's all about dudes.

Fri, 03/05/2010 - 12:35 | 254888 alphaninja
alphaninja's picture

I never know what to think of Barney the lisper.  Good points here and there.

I loved when he let slip that the GSE's are "public utilities" designed to loose

money.

 

http://www.thealphaninja.com/2010/01/quote-of-day-barney-frank-madness.html

Fri, 03/05/2010 - 12:39 | 254898 rawsienna
rawsienna's picture

He is covering his a@@.  He knows the losses are fn/fh and fha are huge and tazpayers are going to be really pissed.  Plus they are hiding the losses until they can pass health care -once it is passed, dont be surprised to see bigtime losses at the GSE and FHA.  THere is a 400bb dolllar hole and someone has to pay -

Fri, 03/05/2010 - 12:40 | 254900 Anonymous
Anonymous's picture

Barney the sputtering automaton.
Get a real job dude.

Fri, 03/05/2010 - 12:51 | 254918 MarketTruth
MarketTruth's picture

Barney is a typical two-faced lying sack! If you look at his record on various things, he goes where the wind blows and what makes the gvt look good and that which saves the grand SCHEME of things. He is a spineless weasel not worthy of orifice. He should go back to running a gay escort agency out of his basement and hanging around with drug dealers.

PS: He said he'd vote for HR1207, then voted against it. One of his many 2-faced lies. When push comes to shove, you know where Barney will side.

(And yes, every innuendo in the above post is meant too)
Ok, let me tell you how i really feel :)

Fri, 03/05/2010 - 12:52 | 254923 Ripped Chunk
Ripped Chunk's picture

Arguing over accounting and valuations for GSE and any MBS's for that matter is really idiotic and has been beaten to death. That is why it will make for great political debate!!!!

Fri, 03/05/2010 - 13:13 | 254962 BlackBeard
BlackBeard's picture

lispy plump little slut.

Fri, 03/05/2010 - 13:29 | 254994 AnonymousMonetarist
AnonymousMonetarist's picture

Hey Frankie Boy ...

'I got 2,500,000,000,000 that I just brought back on my balance sheet that says you're wrong' - Fannie Mae CEO Mike Williams channeling Franklin D Raines

Fri, 03/05/2010 - 13:35 | 255013 Anonymous
Anonymous's picture

What ever the problem is, Uncle Ben will handle it. All he has to do is print print print. There is no more bad news. We can all rest easy now. The world assumed Japan is dead. What are they doing? Printing more money and they are still around. ZH, Relax, Smoke a joint, Get laid. Ben is on it.

Fri, 03/05/2010 - 13:43 | 255022 Anonymous
Anonymous's picture

"We’re going to start from scratch and do housing finance" - YES, but do it The Tyler Durden style. Close insolvet banks and wipe out everyone's credit clean!

Fri, 03/05/2010 - 13:52 | 255035 Rick64
Rick64's picture

Barney Frank is the epitome of our political system. Purposely incompetent with no accountability.

Fri, 03/05/2010 - 14:08 | 255054 Anonymous
Anonymous's picture

Fannie needs to raise the maximun on their loan amount. I think it was raised temporarly to $705,000 in much of CA but its approx $325,000 in the vast majority of rest of America. If the limits were raised and if these loans were ASSUMABLE like all commercial real estate loan are, it would be one of the most effective solutions for recovery in the housing market.

Fri, 03/05/2010 - 14:13 | 255064 phaesed
phaesed's picture

uhhh....

Isn't it too late to say that if you already sold the bonds back to the Government?

Sat, 03/06/2010 - 08:23 | 255977 Anonymous
Anonymous's picture

What Barney actually said was that debt issued by Fan&Fred after they were put under conservatorship status is fully backed by the Fed. Debt issued before that event, not so much. Is this incorrect?

Sat, 03/06/2010 - 10:14 | 256013 Anonymous
Anonymous's picture

did i mention he's another jew traitor?
probably has israeli citizenship like the rest of em.

Fri, 04/16/2010 - 08:45 | 303668 mark456
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