Thursday, June 4, 2009

Jim Lockhart Has No Idea Why Fannie Went Bankrupt, Kanjorski's "Bank Run" Sequel

Alan Grayson, the not-so-caped crusader who has a penchant for irreverently exposing weapons grade stupidity especially when it is manifested by such systemic cogs as FHFA's Jim Lockhart, who is "supposed" to know what it was that caused the implosion of the GSEs he currently presides over, continues his rampage, and this time takes on Fannie Mae. An interesting Q&A follows, in which Lockhart displays his complete lack of understanding of what the principal causes for FNM's downfall were, why the company had $1.2 trillion in CDS months before its implosion, and how its minuscule loss reserve could end up becoming a $100 billion + (and rising) taxpayer loss. Unfortunately, the "pristine" condition that FNM was in, at least as disclosed by its 10-Q the quarter before its was placed into conservatorship, is likely exactly the same condition that Citi, BofA, Wells and all other system banks are in right now. In order to prevent a repeat of the GSE fiasco, Grasyon should be asking Messrs Pandit, Lewis and Stumpf the questions (prospectively), that Lockhart has no answers to (retrospectively).

Anyway, enjoy the video.

Now as a total tangent, as regular readers will recall, in early February, Zero Hedge presented a C-Span interview with Paul Kanjorski in which he disclosed that in September, in the days after the Lehman blow up, Paulson and Bernanke did everything they could to prevent a global run on the bank, with some interesting details. The outcry that ensued was amusing, with respectable journalists such as Felix Salmon announcing that this was likely blown out of proportion, and some people essentially calling Kanjorski a senile old fart. Having personally followed up with the Pennsylvania Democrat, I can attest that senile he is not. Curiously, Paul repeats exactly the same thing he said before C-Span at the end of yesterday's FNM/FRE hearing. Readers who wish to be reminded of how close we came (especially now that Kanjorski has been given ample opportunity to recall the events from that day verbatim), and what were the justifications given for Wall Street's bailout by Paulson and Bernanke in those bleak fall days, please fast forward to the 5 hour 18 minute 20 second mark in the following clip. Sphere: Related Content
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