Deeper into the abyss

July 11, 2008

A man walks out of the headquarters of Freddie MacThe subprime crisis has come to this: The U.S. government is considering taking over mortgage finance companies Fannie Mae and Freddie Mac if their funding problems worsen, the New York Times reported, citing people briefed on the matter. Fannie and Freddie, government-sponsored entities that have the implicit backing of Washington, would be placed into conservatorship, with shareholders left with little or nothing, and the losses on the $5 trillion in home loans they own or guarantee — what amounts to half of all U.S. mortgages — would be paid by U.S. taxpayers.

General Electric is set to sell its Japanese consumer finance operation to Shinsei Bank for 580 billion yen ($5.4 billion), people familiar with the matter said. The business includes a moneylender, Lake, as well as a credit card and housing loan operation. GE had previously said it was looking to sell Lake, but did not say anything about the entire Japanese consumer finance business.

How’s this for an about-face? Anheuser-Busch is in active talks to sell itself to InBev in a friendly deal, the New York Times said on its website, citing people briefed on the matter. Price seems to be a factor, with InBev seemingly open to raising its $65 per share offer, along with pressure from major shareholders like Warren Buffett. What will politicians like Sen. Claire McCaskill and presidential candidate Barack Obama say now that “America’s Beer” may be selling itself willingly?

Citigroup is selling its German retail business to France’s Credit Mutuel for more than $8 billion. The cash proceeds of around $4 billion will go to bolster Citi’s Tier 1 capital ratio, a key measure of a bank’s financial health, by 60 basis points to 9.4 percent.

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Now, didn’t those two GSE contribued in the to the housing/credit bubble. So, practically, they are just paying what they did.

We already had been throughout a “merge” (Fed and Bear) so probably soon markets will retake their normal trend, which ever it is.