AIG,Citi and BAC accumulated almost 1 tril in aid. guarantees as Roubini said thne US financial system has roughly 1.4 tril capital all together just to put it into a context and he expects 3.5 tril in losses. I think that number is far to small 30% of the 12tril mortgage is subprime and Alt-A consider that wiped out plus we also will have in the remaining sectors around 25% to go down plus the home loans that only adds up to 8-10 tril. but we also have big time corporate loans credit card etc. we have trading in trillions of dollars of losses on top of that. Its easy to get a double digit trillion number as a realistic but bad scenario.
Its only a matter of time until people will realize that and stop trusting any state guarantee's as they are as worthless as were the confirmations by CEO's from Lehman Bear Stearns or iconic Mr Thain,Paulson and Bernanke that the situation is under control.
Geithner was confirmed in a post he cannot fill in the interest of the people but as it was intended for special interest groups like the Bilderberger and the people who actually stand behind them like the Ford's. Obama's mother and Geithner grandfather worked for the Ford foundation - so have a wild guess what happens when Ford asks for rescue.
Obama makes some populistic noises from the oval office as he shut down Guantanamo and condemned the behaviour of Thain refurbishing his office for 1.2 mio - that is just 'Wiener Operette' as I call it just theater for the public as a rock star has to keep up his image. The fact that he hired Geithner to run The treasury department proves that he is not serious at all but that the Senate had an overwhelming vote for him proves that the whole state is rotten. Most despicable guy is Senator Schumer who is a lobbyist for the 2Rothschild-gang' and praised Mr g
Geithner as the fittest man to do the job. That's like he would praise Mr. Geithner to replace 'Jack Bauer'
The banks will suck money out of the system until the government will have to default themselves or the other scenario which will come at some point is a WW3 scenario to make a 'fresh start'. That sounds cynical I know but the rules of the gane change immediately in war times and its an ideal distraction and dist ruction. The most efficient way to use resources as America has the strongest army but no money left to buy goods at some point. The next best thing is to take what you need and secure your own well being in times of distress you do not need to excuse yourself. I think that Obama may believe in his words to some degree but the people beyond him who made him president do have a different agenda
Freddie Seeks Up to $35 Billion From U.S.; Fannie May Follow
By Dawn Kopecki and Jody Shenn
Jan. 24 (Bloomberg) -- Freddie Mac, the mortgage-finance company under federal control, needs as much as $35 billion more in federal aid, and Fannie Mae may soon ask the U.S. Treasury Department for rescue funds as well.
Freddie, which took $13.8 billion from Treasury in November, said in a securities filing yesterday that its fourth- quarter operating losses will again drive its net worth below zero. The McLean, Virginia-based company also said it settled a dispute over Washington Mutual loans with JPMorgan Chase & Co.
The request for funds comes as the Treasury faces increasing demands from U.S. financial companies, including Bank of America and Citigroup Inc., that are coping with the fallout from a slumping housing market and a deep recession that’s driving foreclosures to record levels. Treasury officials pledged in September as much as $100 billion to Fannie and Freddie each to ensure their solvency.
“Their losses are going to be much higher than anyone anticipated,” said Paul Miller, an analyst with FBR Capital Markets in Arlington, Virginia. “The more and more that people are digging into these portfolios, they’re finding out the more and more these guys were doing subprime and Alt-A loans and classifying them as prime.” Alt-A loans were made to borrowers with little or no income verification or to those with credit scores slightly above subprime.
Freddie and Washington-based Fannie are the largest sources of mortgage money in the U.S., owning or guaranteeing a combined $5.2 trillion of the $12 trillion home-loan market.
The companies have posted five consecutive quarters of losses totaling $68.4 billion combined. The Federal Housing Finance Administration seized their operations in September amid concern from regulators that the government-sponsored enterprises may fail in the worst housing slump since the Great Depression.
Fannie’s Plans
Fannie, which hasn’t yet drawn on the Treasury backup funds, said in November that it may do so after it reports fourth-quarter results next month. Fannie also said at that time that $100 billion may not be enough to keep it afloat. Treasury agreed to pump money into the companies if the value of their assets drops below what they owe on their obligations.
“Given that they have $4.5 trillion of risk out there, $100 billion is a drop in the bucket,” Miller said. “Given the fact that their risk profile on these loans is greater than they led everyone to believe, greater than $100 billion in losses on each institution would not surprise me.”
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