Good Morning,
I would be more than happy to let loose on FNMA, GNMA, FHLB and all those other messes the Feds have created. But I fail to see how this issue affects Minneapolis. If the city and / or it's pension funds have not invested in mortgage-backed bonds, how is this an issue facing the city? What did those the 3 listed points do that would constitute stealing money from the city?
Thank you.
Allen Graetz Lowry Hill
Victoria Heller wrote:
From The Daily Reckoning Weekend Edition January 15-16, 2005
Fannie is in the news again, and it sure ain't good news. Two Ohio public retirement funds have been granted lead plaintiff status in the case against Fannie, Ohio's Attorney General announced on Thursday. These two retirement funds - one for teachers and one for public employees - lost millions of dollars by investing in Fannie Mae, and they're calling it fraud...securities fraud. They say Fannie has issued "numerous false and/or misleading statements and financial reports." "Here's the big deal," began Addison Wiggin after we sought his opinion on the crisis. "It's a trial that everybody is watching...If Ohio can win its case, every other state pension system in the country is going to be on this in a heart beat. They were ALL heavily invested in Fannie."
Local commentary.....
Not only did Fannie enable several BAD DEALS to occur in Minneapolis (like Riverside Plaza and Stone Arch Apartments) but one out of every five home mortgages has been purchased by Fannie Mae, bundled with others, and sold as bonds to foreign investors. If anyone thinks that they are dealing with a local bank, think again. Banks have become "loan originators" and "loan servicers". Most mortgage debt these days is owed to foreigners, predominantly Asian according to the Wall Street Journal.
So Minneapolis should go on the offensive - start suing those who stole our money.
#1 - Real estate developers #2 - Fannie Mae and other corporate crooks like Target #3 - Standard & Poors, Moody's and Fitch
[Note to Listmanager - My post stops here. The following postscript is extraneous, but related]
Vicky Heller North Oaks and Cedar-Riverside
Postscript: Continuing the commentary about Fannie's Ex-CEO, Franklin Raines who was also President Clinton's BUDGET DIRECTOR!!!!!
"It's a major litmus test for the U.S. financial system," Addison continued. "Because any decision in favor of Ohio would risk major havoc in the stock market, the housing market and the economy itself, there's going to be immense political pressure to steer this one in Fannie's favor. We're always pointing the finger at Japan saying: you can't recover from your credit induced bubble burst because you won't let your big banks fail, but are we about to let the nation's second largest financial institution get trounced in the markets and the courts? That's the question."
The stock market as a whole was weaker last week, but not much. The Nasdaq and the S&P lost 1 and 2 points respectively, to trade at 2,088 and 1,185. The Dow lost 46 to 10,558. Commodities were strong, especially in the energy sector. Crude was up nearly $3 last week and now trades at $48.38. This year, crude is already up 11.3%. Gold and silver gained too. Gold gained $3.50 to $422.50 and silver 17 cents to $6.60 an ounce.
"This Fannie story is going to become quite a spectacle," cautioned Addison as we left work on Friday. "Think Enron...or LTCM. Franklin Raines should move to Europe, or Asia, and get the hell out while he can still use the airports."
Either that, or line him up as Greenspan's successor in 2006...
Regards,
Tom Dyson, The Daily Reckoning
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