Treasury Borrowing Needs Now Beyond Belief

Ryan says Treasury borrowing needs unprecedented:

The potential for deterioration in economic conditions, given the contraction in credit, may also affect budget conditions this year - Ryan

They are now seeking private investment:

We all benefit from a deep, liquid Treasury market, and SIFMA and the Treasury Markets Practices Group have the opportunity to take a leadership role in devising and implementing private-sector solutions to current challenges

AP says the Treasury might revive the 3 yr. note:

FDIC - Cash Strapped Already???

Oh, what news reports are buried below the political machine hype.


I would not rule out the possibility that at some point we may need to tap into (short-term) lines of credit with the Treasury for working capital, not to cover our losses, -- Chairman Sheila Bair

They also are considering raising premiums in October. Bair also is planning on charging higher premiums to the more risky banks:

The agency also plans to charge banks that engage in risky lending practices significantly higher premiums than other U.S. banks

This is pretty early in the game to be borrowing money. According to these reports the FDIC has only borrowed money at the tail end of the S&L crisis in the 80's.

SmartMoney has more details:

Bail out of Fannie/Freddie a "Disaster" - Jim Rogers

Fannie Plan a `Disaster' to Rogers; Goldman Says Sell

They are short, at least there is a disclosure.

The U.S. Treasury Department's plan to shore up Fannie Mae and Freddie Mac is an ``unmitigated disaster'' and the largest U.S. mortgage lenders are ``basically insolvent,'' according to investor Jim Rogers.

Taxpayers will be saddled with debt if Congress approves U.S. Treasury Secretary Henry Paulson's request for the authority to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac, Rogers said in a Bloomberg Television interview. Rogers is betting that Fannie Mae shares will keep tumbling.

Bailout for Freddie/Fannie

CNN reports:

Treasury Secretary Henry Paulson said the Bush administration plans to ask Congress to enact legislation to temporarily increase the line of credit that the companies have with the Treasury. It would also allow the Treasury to buy stock in the companies.

Paulson also said the Federal Reserve should be given a greater role supervising the finances of Fannie and Freddie.

In addition, the Federal Reserve announced Sunday that the mortgage finance companies can turn to the Federal Reserve Bank of New York for funds. The move gives Fannie and Freddie the same access to the funds as commercial banks and Wall Street firms. The agency granted investment banks such access earlier this year in the wake of a similar crisis of confidence when investors lost faith in Bear Stearns