The cost to Freddie Mac and Fannie Mae of raising capital is getting more prohibitive by the day, making it likely that the government will have to inject cash into the largest U.S. mortgage finance companies. Declines in the common stocks of the government-chartered companies accelerated last week to more than 90 percent for the year and yields on their preferred shares more than doubled on speculation Treasury Secretary Henry Paulson may need to bail them out, reducing or wiping out the value of the securities. McLean, Virginia-based Freddie fell 52 percent last week to $2.81 on the New York Stock Exchange and Fannie of Washington dropped 37 percent to $5. Their preferred shares are trading as low as 19 cents on the dollar on speculation their dividends may be suspended.
Declines in the common stocks of the government-chartered companies accelerated last week to more than 90 percent for the year and yields on their preferred shares more than doubled on speculation Treasury Secretary Henry Paulson may need to bail them out, reducing or wiping out the value of the securities.
McLean, Virginia-based Freddie fell 52 percent last week to $2.81 on the New York Stock Exchange and Fannie of Washington dropped 37 percent to $5. Their preferred shares are trading as low as 19 cents on the dollar on speculation their dividends may be suspended.
Long before the mortgage crisis began rocking Main Street and Wall Street, a top FBI official made a chilling, if little-noticed, prediction: The booming mortgage business, fueled by low interest rates and soaring home values, was starting to attract shady operators and billions in losses were possible. "It has the potential to be an epidemic," Chris Swecker, the FBI official in charge of criminal investigations, told reporters in September 2004.But sources familiar with the FBI budget process, who were not authorized to speak publicly about the growing fraud problem, say that he and other FBI criminal investigators sought additional assistance to take on the mortgage scoundrels. They ended up with fewer resources, rather than more. In 2007, the number of agents pursuing mortgage fraud shrank to around 100. By comparison, the FBI had about 1,000 agents deployed on banking fraud during the S&L bust of the 1980s and '90s, said Anthony Adamski, who oversaw financial crime investigations for the FBI at the time.
Long before the mortgage crisis began rocking Main Street and Wall Street, a top FBI official made a chilling, if little-noticed, prediction: The booming mortgage business, fueled by low interest rates and soaring home values, was starting to attract shady operators and billions in losses were possible.
Because too many people had an interest in not noticing it. Just remember how it was two years later, when the hard data on the bubble coming to an end was already available: denial was still unanimous.
In 2007, the number of agents pursuing mortgage fraud shrank to around 100. By comparison, the FBI had about 1,000 agents deployed on banking fraud during the S&L bust of the 1980s and '90s, said Anthony Adamski, who oversaw financial crime investigations for the FBI at the time.
Neo-liberalism in action. Money rules. If you have more it means you're a better person. The onlyexception is if you get caught getting rich illegally - thus the easy solution to eliminate those that could catch you. In the long run, we're all dead. John Maynard Keynes
More than a year into the credit crisis, the world's top central bankers admit they are still in the dark as to what its ultimate impact on the global economy will be. By the same token they are unsure to what extent weakening growth will help to ease high inflation."There is enormous uncertainty about where we stand at the moment," Stanley Fischer, governor of the Bank of Israel, said at the close of the Federal Reserve's annual retreat in Jackson Hole, Wyoming.Mr Fischer told central bankers from 43 nations "we are in the midst of the worst financial crisis since World War II". But it was still not clear how big an event it would turn out to be.So far, he said, "in real economy terms we are not looking at anything exceptional". But the crisis was entering a "second round" in which economic and financial weakness could feed on each other.
"There is enormous uncertainty about where we stand at the moment," Stanley Fischer, governor of the Bank of Israel, said at the close of the Federal Reserve's annual retreat in Jackson Hole, Wyoming.
Mr Fischer told central bankers from 43 nations "we are in the midst of the worst financial crisis since World War II". But it was still not clear how big an event it would turn out to be.
So far, he said, "in real economy terms we are not looking at anything exceptional". But the crisis was entering a "second round" in which economic and financial weakness could feed on each other.
