The BailOut - and no, Not for You, Average Joe, Freddie & Fannie Seized

Via the New York Times:

Senior officials from the Bush administration and the Federal Reserve on Friday called in top executives of Fannie Mae and Freddie Mac, the mortgage finance giants, and told them that the government was preparing to place the two companies under federal control, officials and company executives briefed on the discussions said

The plan, which would place the companies into a conservatorship, was outlined in separate meetings with the chief executives at the office of the companies’ new regulator. The executives were told that, under the plan, they and their boards would be replaced and shareholders would be virtually wiped out, but that the companies would be able to continue functioning with the government generally standing behind their debt

So, maybe this explains the mystery Wall Street Drop yesterday?

What is more interesting is this doesn't actually appear to be a bailout. It's a plain takeover, so the grand privatization, agenda, the ones who believe free markets take care of eveything.... is going to have the government seize two major financial institutions?

Update: It appears the Wall Street Journal is saying the stock will be diluted and the executives who made this mess will leave their posts....eventually and an injection of cash.

So, obviously with major newspapers reporting quite different seize details the truth will probably be repressed to not rock the markets, which it all will anyway.

Devils of course live in Details.

Seekingalpha has a mix of the two terms reported above. The executives are immediately out, the stock will be diluted not worthless and capital will be injected slowly in order to not show the enormous cost immediately.

One thing I think all will say is true: This is the largest financial intervention in the United States history.

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Highway funds out of money

...and in addition to the Friday late bombshell that Freddie and Fannie are going to be taken over by the Government, we have Government Highway funds out of money.

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This one got snuck in as well

Silver State Bank closed.

The lender, the 11th bank to fail in the U.S. this year, was overexposed to risky real-estate loans, a problem that's vexing many banks amid the worst financial crisis in a generation. Silver State had nearly $2 billion in assets and 17 branches in Arizona and Nevada.

OK. No big deal, right? Well, there is one small item that makes this a little interesting.
It seems McCain's son sat on the board of directors of this bank.

On the eve of President Bush's signing of the housing bill this week, which will regulate, as well as bail out, mortgage behemoth Fannie Mae and Freddie Mac, and create a $300 billion program to expand the Federal Housing Administration's capacity to guarantee mortgages, comes word that Andrew McCain, son of presumptive Republican nominee, John McCain, has resigned today from Silver State Bank's Board of Directors. The bank cites "personal reasons" for Mr. McCain's sudden departure

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huh

all so interesting and why does this bank name remind me of something from the 1980's?

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WaMu CEO ousted

Yet another $23 million for doing a bad job.

story.

WaMu is to lose $19B in mortgages this year.

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Dr. Doom

Says I told ya so. But what now Roubini? What does this all imply in the long term?

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law blocked that could have stopped GSE disaster

I'm not up on the actual bill but Oxley,who retired in 2006, blocked a house bill which he claimed would have adverted this disaster. He say the White House gave them the 1 finger salute.

Bear in mind he is a Republican and he goes further:

Adamant that the only solution to the problems posed by Fannie and Freddie was their privatisation, the White House attacked the bill. Mr Greenspan also weighed in, saying that the House legislation was worse than no bill at all

Oxley was one of the sponsors of a bill to clean up accounting after the Arthur Anderson accounting scandals of 2001.

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Freddie/Fannie sell $7B of debt

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