Fannie Mae

A Short Lesson in Chemistry

The Obama administration is on the case, don't you worry. Given that expanding the balance sheets of Government Sponsored Entities, increasing their regulatory caps on assets, and then, when caps could rise no further, permitting them to resort to securitization to move underpriced real estate loans off their balance sheets didn't work, let's relax caps even more, and, while we are at it, give them a blank check drawn on the Treasury.

Shadowstats' John Williams: Prepare For The Hyperinflationary Great Depression

"The intensifying economic and solvency crises, and the responses to both by the U.S. government and the Federal Reserve in the last two years, have exacerbated the government's solvency issues and moved forward my timing estimation for the hyperinflation to the next five years, from the 2010 to 2018 timing range estimated in the prior report. The U.S. government and Federal Reserve already have committed the system to this course through the easy politics of a bottomless pocketbook, the servicing of big-moneyed special interests, gross mismanagement, and a deliberate and ongoing effort to debase the U.S. currency. Accordingly, risks are particularly high of the hyperinflation crisis breaking within the next year." - John Williams, ShadowStats

AIG General Counsel Who Protested Meager $500K To Have Her Bluff Called, Get Sacked

It appears the only thing worse in this world than a measly $500,000 salary is getting no salary at all. And that's exactly what is about to happen to AIG General Counsel, Anastasia Kelly, who before joining the bankrupt firm, was a GC at such reputable organizations as MCI/WorldCon (sic) and Fannie Mae. To paraphrase the objections against a very prominent Treasury Secretary recently, the question is not whether or not she will leave the job, the question is how she got it in the first place. Kelly, who recently was protesting the $500k salary cap imposed by Pay Despot Ken Feinberg, yet was in Benmosche's black book, will likely be out of the organization, presumably involuntarily, by year end. We are confident that with the economy rocking she will be able to find a job that pays her much more in line with her true skills... which based on her track record hopefully involves more than leading three sequential companies straight into bankruptcy.

Bernanke's Done Deal Reconfirmation May Not Be A Done Deal After All

With everyone expecting the Chairman's reconfirmation process on Thursday to be merely a formality, Senator Bob Corker throws this wrench after he "said he wasn't sure yet whether the chairman had the votes on the Banking committee or in the Senate as a whole." The Hill reports, "I don't know where that sits," Corker told reporters when asked if Bernanke would have the votes to get a second term, adding he wasn't sure whether Bernanke would have the votes in the 23-member Senate Banking Committee, either.

Senator Sanders: "Ben Bernanke Is Part Of The Problem"

On December 3rd, senators will have to decide: will they vote with their conscience, or with Wall Street's checkbook. Bernie Sanders has made his choice: "No, I absolutely will not vote for Mr. Bernanke. He is part of the problem. He's the smartest guy in the world, why didn't he do anything to prevent us from sinking into this disaster that Wall Street caused and which he was a part of? No, I will not vote for Bernanke to stay on as chairman."

Guest Post: Deficit Doubles for Government's Pension Benefit Guaranty Corp.

So many future bailouts to look forward to, so little time. So many cans do kick down the road via accounting adjustments, so few feet do keep doing the kicking. While I read this piece I was struck by my own reaction... not even $30 billion in deficit? This is peanuts! We've become so numb to bailouts that anything less than hundreds of billions seems like a normal part of Bailout Nation. Yet just over a decade ago the world was in a panic over hedge fund Long Term Capital and its gaping hole of $3.6 billion. How quickly we've adjusted to brushing off our shoulders handouts and bailouts 10 times that size. The cost for one of the smallest handouts, Cash for Clunkers was more than the bailout of LTCM in 1998. Need to manipulate housing prices higher? It's worth it! Only costs $16 billion; or with Cash for Cul de Sacs v 2.0 - $30B+. Peanuts.

Rosenberg: "Obama's 'Deja Vu' Over-Consumption, Over-Borrowing And Over Building Policy Is Doomed To Failure"

"In 1982, Ronald Reagan was President (two consecutive terms as Governor of California), Don Regan was Treasury Secretary (35 years of financial sector experience), Martin Feldstein as the Chief Economic Advisor to President Reagan (the dean of business cycle determination), and Paul Volcker was Fed Chairman (9 years of prior financial sector experience). Compare and contrast to Barrack Obama (junior senator from Illinois for 3 years); Timothy Geithner (21 years experience in government, three years as a lobbyist); Larry Summers (no private sector experience; 27 years of academia and government) and Ben Bernanke (no private sector experience; 30 years of academia and government). Which team do you think deserved the higher multiple — the one with actual experience in the real world or the one immersed in academia and government?" David Rosenberg

Guest Post: Commentary On Neil Barofsky's Upcoming TARP Report

Let’s hope that Barofsky did not rely upon Blackrock for uncovering problems. Blackrock was involved in disturbing activity as a CDO manager. Among other things, Blackrock Financial Management was CDO manager in some horrific 2007 vintage CDOs such as Pacific Pinnacle CDO ($1 billion; closed 1/1/07; Event of Default 2/4/08); Pinnacle Point Funding ($2B closed 6/7/07; acceleration 12/13/07); Tenorite CDO I ($1 B closed 5/11/07; liquidation 2/7/08); or Tourmaline CDO III ($1.5 billion closed 4/5/07; Event of Default 3/31/08).

The Power of The Department of Justice's Office of Legal Counsel

It is easy to forget that the United States Government and its citizens have distinctly different relationships with the law. While citizens and corporations look at statutes to see what they are prohibited from doing, governments must look to statutes to see what they are specifically authorized to do. In effect, the United States must ask for permission rather than beg for forgiveness when undertaking action. As one might imagine, this has a very particular effect on how the lawyers that work for the general counsel's office of various government agencies and departments go about doing their job.