Continue reading Fannie Mae next in line to hand out questionable bonuses

Fannie Mae next in line to hand out questionable bonuses originally appeared on BloggingStocks on Thu, 19 Mar 2009 08:00:00 EST. Please see our terms for use of feeds.

In trying to be all things financial to all people, Citigroup Inc. (NYSE: C) lost track of what it was, a successful bank. Now, the word success is a term that can only be used in a mocking fashion as corporate leadership allowed the company to be marginalized, with the stock sinking 97% in a two year period (chart below).

The popular television show American Idol, is in its eighth season, but before they even narrow down the list of hopefuls to the 12 finalists Citigroup has already picked out its idol -- that would be Uncle Sam!

Continue reading Citigroup's American Idol is Uncle Sam

Citigroup's American Idol is Uncle Sam originally appeared on BloggingStocks on Thu, 26 Feb 2009 11:00:00 EST. Please see our terms for use of feeds.

The Economist reports that the Federal Reserve is now doing something that it has done during the Great Depression and in the 1960s -- put its own capital at risk to keep the banking system from collapsing. The Bear Stearns Companies (NYSE: BSC) saw its stock lose 47% of its value today because no other banks will do business with it.

The Fed is creating the illusion that it is not bailing out Bear Stearns by using JPMorgan Chase & Company (NYSE: JPM) as the conduit through which its bailout will flow. JPMorgan will assume the Bear Stearns collateral and will forward the Fed's capital to Bear Stearns -- but this will only last for 28 days. Here's one way that the Fed is putting itself at risk -- if Bear Stearns' collateral declines in value, the Fed -- not JPMorgan -- will take the hit.

This move is not the first one that puts the Fed at risk. Earlier in the week, the Fed put $200 billion on the line and agreed to take Mortgage Backed Securities (MBSs) as collateral for those 28 day loans. Once again, the Fed is assuming the risk that the MBSs will retain sufficient value to protect the Fed's loan. But many questions remain:

Continue reading How the Fed is putting itself at risk for Bear Stearns

How the Fed is putting itself at risk for Bear Stearns originally appeared on BloggingStocks on Fri, 14 Mar 2008 17:31:00 EST. Please see our terms for use of feeds.