I never imagined that Big Brother would seize them while they were still financially solvent organizations. It appears that Fannie and Freddie shares will continue to trade on the NYSE. So apparently, common shareholders are owners without any control over the companies. Is that really ownership?
From the 5th Amendment of the U.S. Constitution:
...nor shall private property be taken for public use without just compensation.Are there any lawyers out there with comments?
Posts
"...nor shall private property be taken for public use without just compensation."
ReplyDeleteJames, Taking anything at face value at such a high level is bound to add up to "meaning nothing" because of all the over-simplifications that are necessary. For example, one could easily argue that the US Federal Taxation System is not permitted since one doesn't get back exactly what they give. (I.e., it reallocates money from middle class people to the rich and poor of the nation.)
The GSEs aren't regular corporations. They were spun off by the government and are still subject to federal oversight by the OFHEO, which no other company is.
ReplyDeleteNothing is definitive until Sizzle Lien chimes in.
ReplyDeleteUnfortunately I have been too busy ridiculing housing bulls on my blog. Observe this exchange from the other day.
ReplyDelete“Sizzle Lien – Prices will continue to fall as sure as 1+1=3.
Bull – I think you mean 1+1=2.
Sizzle Lien – Silly bull…we bears know 1+1=3.
Bull – I really don’t think so, check out this article in the Times: (REPORT: 1+1=2…only idiots believe otherwise).
Sizzle Lien – That report is typical NAR spin – why didn’t they graph it?
Bull – Huh? You cant graph that – it just says 1+1=2.
Sizzle Lien – ARLINGTON ISNT IMMUNE!!!!!
Bull – What? I didn’t say anything about Arlington. All I said was 1+1=3.
Sizzle Lien – PALOS VERDES DROPPED 40%!!! ARLINGTON ISNT MAGICALLY PROTECTED!!! YOU WILL BE CRYING ON YOUR COUCH SOON!!!
Bull – Seriously, what is wrong with you. Did you eat paint chips as a kid? Im out of here!”
Notice the subtle way I moved the argument in mid debate. Once I brought up Arlington, the Housing bull knew he was overmatched and had no choice but to leave, defeated. Now if you will excuse me, the phone is ringing…No doubt Hank Paulson wanting to get my thoughts on how to restructure Fannie & Freddie…
Got Bacon?
Sizzle Lien
Hey Sizzle Lien
ReplyDeletewhat's your blog?
Dave,
ReplyDeleteSizzle Lien can't afford a blog. We all know renters are dirt poor.
Besides, we all konw only douchebags have conversations with imaginary people on imaginary blogs.
Chuck Ponzi
It amuses me that the best the bulls can do is taunt. Freddie and Fannie went under so obviously their business model needs adjustment.
ReplyDeleteThe legalese of the seizure will be interesting. What I'm curious about is how will this effect the lending portfolio in the future. Too many forign buyers are demanding rule changes to move today's quantity of mortgages.
And the 1+1=3 is funny. ;) Trendlines are too complicated for some.
Got Popcorn?
Neil
Freddie and Fanny were insolvent. Look at their assets. The only thing that kept them balance sheet solvent was tax deferred assets booked as core capital.
ReplyDeleteThe bond buyers who bought their paper on the way down are LOLing all the way to the bank.
Epic failure.