Let's Give them a Hand

Although a few of us have long had a pretty good inkling about where the share prices of Fannie Mae and Freddie Mac were ultimately headed (hint: it rhymes with "Nero"), it seems that many of those who are supposed to know best never quite "got it." Some, in fact, were totally clueless.

Of course, not every analyst covering the sector or investor allowed to buy the shares of the two government-sponsored enterprises got things spectacularly wrong, though the list of those who did seems pretty extensive.

Regardless, there are some individuals and firms who deserve extra special recognition for their complete lack of competence. I am referring, in particular, to the analytical team at Citigroup, which steadfastly maintained a "buy" recommendation on Fannie Mae's shares over the course of the past year  (according to Bloomberg) -- as they plunged by nearly 99 percent.

Let's give these highly-paid "experts" a hand (or, maybe, if you are a customer, some other appendage?). (Hat tip to JJ.)

[Click on graph to enlarge.]

Comments

[Independent Accountant]

Don't get me started on Citigroup. Feh!

[Loyalty Pays]

Does one have to be a complete cynic or paranoiac to believe that, when Citi's turn comes, Hank and his boys will reward Citi for their loyalty in helping to prop up Fannie for as long as they did?

[Bruce]

On so on we go folks. The multi-trillion dollar global game of Monopoly, all played with "funny money". And apparently, all the major players on the board seem to have a "Get Out of Jail Free" card too! Until people start to wake up and realize that the money they're holding is nothing but worthless paper backed up with nothing, things will never change. So as long as people can't seem to understand that their net worth is based on fiat money, they'll continue going about their daily affairs as if nothing has changed, totally oblivious to the fact that they're a bunch of hoodwinked zombies. I guess in their world, it really is a case of "business as usual"...

Tomorrow should be fun.

[roger]

yea go tell the Pope of Rome that there is no God,see how far you get ha ha.
How about intelligent design?

[NIck]

Why wouldn't Citi have a strong buy rating for Fannie/Freddie?

After all, Citigroup itself is too big to fail. Let them lie, deceive customers, recommend bad investments, invest in bad securities themselves, and take as many writedowns as they need.

If the investing public loses confidence in Citi the same way it lost confidence in the GSEs, the Fed will absolutely step in and bail them out. Same with all of the largest banking and financial giants like JPMorgan and Citi.

In fact, I'd bet that the government would be more willing to let the GSEs fail than for Citi or JPMorgan to go under.

[Shankar Khadye]

Over the last few months I have been asking myself one question -

How many times would they let me short Citi in 20s?

And I'll be asking the same for next few years at - 18, 16, 15, 12.......you get the picture.

[roger]

What we have to day is a reversal of Social Darwinism a la Herbert Spencer.
Its no longer the superior talent that rules but the inferior talent that are in charge. the brainless tweets are inheriting the earth.

[Black Star Ranch]

...speaking of a free "getting out of jail card".....

Franklin Raines, In 1991 was Fannie's Mae's Vice Chairman, left to work for Bill Clinton as White House Budget Director, in 1999 he returned to Fannie Mae as CEO. NOT a dumb guy; Harvard graduate, Rhodes Scholar at Oxford, the first black man to head a Fortune 500 company. Took "early retirement" while SEC investigators looked into alleged "accounting irregularities" which included the shifting of losses so senior executives, such as himself, could earn large bonuses. The bonuses equalled $115 Million for himself and two of his "partners in crime". The Government just settled that civil suit for a paltry $3-million - paid for by Fannie Mae's insurance policies! Imagine that. None of the bonuses were returned NOR were they criminally indicted.

http://en.wikipedia.org/wiki/Franklin_Raines

In 1991, I expense an expensive copier on my tax return and during the audit the IRS wants my "first-born" and HIS wages for 20-years. Things sure have changed in 10-15 years and there's absolutely nothing we can do about it. The Democrats & Republicans keep putting up their "Candidates-Du-Jour" for us to vote on - So it LOOKS like an election, and the same malarky continues for another 8-years.

Secession makes more sense the more I learn. Well, I've always considered myself a Nevadan anyway. I wonder if WE'LL put up a wall around THIS fine State to keep the illegals out? WAIT - we WANT them to come into our state and visit our casinos - well, shoot....forget the wall for now.

I'm glad we had this talk, I feel SO much better now.....

[dukeb]

Can we overlay a chart of home sales with comments from the NAR at each leg down touting it to be the perfect time to buy? (I get the feeling they'll pair up rather nicely!)

[Al]

dukeb,

Have you ever really looked closely at those "it's a perfect time to buy*" adds. See the little asterisk.

* It's a perfect time for us for you to buy.

[OCDan]

I am so over this entire mess. Until the sheeple get it, nothing is gonna change. For most, it is hand to mouth, so what are they gonna do?

Yawn!

Call me when the (m)asses wake up and realize what has been done.

Wage slaves=DEBT SLAVES.

Jefferson was right, we have awakened to become slaves on the land our forefathers conquered.

Well, it serves us right. First, we get what we vote for and second, karma (for running the natives off the land) sucks!

[WeeklyTA]

9/8 - Ratings

FNM - Fannie Mae

Lehman Brothers - Reiterated "equal weight" and reduced price target to $4 from $20!!!

FBR - Reiterated "underperform" and reduced price target to $.50 from $6.

----

FRE - Freddie Mac

FBR - same as above

Credit Suisse - Reiterated "underperform" and reduced price target to $1 from $8!!!

That's really funny. They showed up to a party on Monday that ended on Sunday. Talk about LATE.