Morgan Stanley To Help With Mortgage Mess

Treasury Dept. Taps Investment Firm To Help Government Assess Risks Facing Fannie, Freddie

(AP)  The Treasury Department said Tuesday it had hired investment firm Morgan Stanley to help the government assess the risks facing mortgage giants Fannie Mae and Freddie Mac.

For $95,000 to cover the company's expenses, Morgan Stanley will assess the state of the mortgage market and give the government a financial profile of the two firms. The two mortgage firms received a promise of support from the federal government as part of a sweeping housing rescue bill passed by Congress and signed into law by President Bush last week.

Treasury spokeswoman Brookly McLaughlin said the contract would help ensure the Treasury Department had good advice to decide how to support the two mortgage firms, which together own or guarantee half of all U.S. mortgages.

While Congress gave Treasury the authority to extend an unlimited amount of loans to the two companies, Treasury Secretary Henry Paulson has stressed that the new authority is a back-up measure that will not be used unless market conditions worsen.

In a statement, Morgan Stanley Chairman John Mack said his company would help the government evaluate "various alternatives for Fannie Mae and Freddie Mac."

"We are pleased to be able to offer our services to the government and look forward to working with Secretary Paulson and his team as they work to restore stability to the global capital markets and confidence in the U.S. housing market," Mack said.

The contract will run until Jan. 17, three days before the next president is sworn into office. McLaughlin said that was a consideration in determining how long the contract would last.

The administration on July 13 unveiled a plan to provide unlimited government loans to the two mortgage giants and to purchase stock in the two companies if needed for a period covering the next 18 months. Congress ultimately adopted those proposals as part of a broader bill that also seeks to help keep 400,000 households from losing their homes to foreclosure.

Critics charged that the open-ended nature of the support for Fannie and Freddie would expose taxpayers to billions of dollars of potential losses. Paulson has insisted that the package needed to be structured in this way to boost financial markets' confidence as the companies deal with mounting losses from mortgages that have gone bad.

Paulson said this assurance was critical not only for investors in this country but around the world. Of the $5 trillion in debt and mortgage-backed securities Fannie and Freddie have issued, more than $3 trillion is held by U.S. financial institutions and over $1.5 trillion is held by foreign institutions.

[sebastian27-2009]

The "value" of residential housing has, in some areas, mostly large cities, been artificially boosted by cheap money and low down payments to the point that no one knows what the true value really is.
In other words, value and prices have diverged and it will be years before people can know what the real value of their house is.

[walt1944-2009]

It has been learned that Morgan Stanely has "FROZEN" most of its home equity loans to borrowers whose home values have fallen (which is practically EVERY house out there)!

This means that homeowners who had equity left on their line of credit yesterday are probably over-extended today! Any home repair projects or other major purchases that were planned and that would have HELPED get us out of the DEPRESSION we are in, suddenly won''t get finished or even started!

And all thanks to the "Ferengi" economics of the Great Emperor Bush II, "Bagdad John McBush (SURRRRRGE, DRRRILLLLLL!)" McCain, and every neocon Fascist Nazi Republican out there!

And yet, "Bagdad John" is SURRRRRGGGGING in the polls!

Were we born stupid, or did we learn to be that way????

SIG HEIL, BUSH!!!!!
sig heil, POSITIVELY MORE OF THE SAME, "DRRRRILLLL" McCain!!!!!

[random_radar]

"The so-called Republicans currently in office are the most shameless bunch I have ever seen. The damage has reached irreparable proportions.

Posted by omega39 at 11:01 AM : Aug 06, 2008"

You must be awfully young. Don''t you have to be at least 13 to post on this blog?

Give it a few years and you will not believe all the things you will see. It just gets more laughable every decade!

[random_radar]

Since the fox is already in the chicken coop, might as well hire him as a consultant to figure out why the chickens got eaten.

[shanev137]

Isn''t this like when Bush tried to hire Henry Kissinger to investigate 9/11 ?

[omega39-2009]

The so-called Republicans currently in office are the most shameless bunch I have ever seen. The damage has reached irreparable proportions.

[Gary Kempf]

Morgan Stanley To Help With Mortgage Mess

Shouldn''t that be Morgan Stanley to help themselves to increased profits from mortgage mess? Somebody needs to do the V8 head slap to Brookly McLaughlin DUH! Are really that stupid????? Going to a company that is part of the problem to get a cure.
"Hold still Brookly" I want to use a baseball bat on your head to make sure you understand. IDIOT!!!!!

[marshall_nee]

Morgan Stanley? HAHAHAHAHA!!!

Now that is a case of the fox guarding the hen house.

[whitemale08]

I forcasted right here on this post that this would happen.

I said that Hank the Snake Paulson from Goldman Smacks would get their dirty little paws on that "check book" from Congress through this "bail out" package and then hand it over to one of the founding member banks of the illegal Federal Reserve System.

Now that it is obvious to them and anyone who is sane and understands "physical economics" instead of this garbage "mystical Keynesian" economic nonsense will knows that the "global financial system" is dead.

The liquidity machines to churn out worthless Federal Reserve Notes in the form of cheap credit are shut down as a result of the housing crisis.

There is no new "credit bubble" to create another "liquidity machine" to replace the old one.

It''s over folks time to pay the piper of ignoring the universal and natural laws of "physical economics".