Freddie Mac-No Politics (FMCC)

[mr_bitterness]

I am not sure there is a whole lot of proven success at the moment. At this point, business as usual could be considered a success but I think we need to see a longer track record of successes than just the last few months. I have 'long' thought that BAU was all that was needed to get this moving out of the $1 range. imo that may be what is behind the recent doubling of pps... people are beginning to see that business continues to go on here and the news is beginning to turn towards confidence and positivity.

I don't think they are done yet with making changes under the conservatorship and from the talk we are hearing, they want to make more radical changes than have been made so far.

The only justification for going as radical as a re-org or privatization (or any of the other wacky restructuring schemes on the table), in my mind, is to give evidence that things will not continue as they had in the past, and to give confidence that the 'new' FRE and FNM will be capable of doing their part in turning this crisis around. To give security to the people that the companies will be run efficiently, correctly and be tightly regulated and closely monitored.

Overall I think the changes are less about doing what is good for the companies and more about doing what is good for the economic conditions that, according to popular opinion, these companies have created. Taking responsibility for the climate and making a responsible change. I think nationalization is an option mostly due to the concern with popular opinion. They need to stabilize the people's confidence in this sector if they are to turn things back up. The companies need to remain healthy to provide the liquidity needed to do this.

It would not be a bad thing for these guys to start showing more responsibility in how they conduct business. It would certainly produce fewer future defaults and so on, so it would effectively (and ultimately) be good for the companies anyway.