Fannie and Freddie Group are already heavily in debt at this time. A company like Lehman Brothers losing billions of dollars in a quarter is already very high, but compared with Fannie and Freddie Group, it pales into insignificance.
Fannie and Freddie's losses in July alone exceeded US$70 billion, such a high loss in just one month. The previous losses have not yet been taken into account, otherwise it would be even more terrifying.
In early July, the two companies raised US$5.5 billion and US$6 billion respectively by issuing additional shares in order to tide over the difficulties.
As a result, not only did the crisis fail to be overcome, but the burden on the company was once again intensified.
Originally, the Fed hoped that the dollar would appreciate so that it could absorb deposits, allowing banks to have more cash and reduce redemptions, thereby giving banks more funds to operate.
Fannie and Freddie Group also thought so, so they borrowed huge amounts of funds and invested in U.S. dollar interest rate swap transactions, hoping that through such operations, they could earn a large amount of money and tide over the difficulties.
But they never expected that even though the Federal Reserve had raised interest rates again, there were still not many people making deposits. Frankly speaking, everyone no longer believed in banks.
Then Feng Yu, Kirilenko and others took the lead in selling the U.S. dollar, continuing to suppress the U.S. dollar exchange rate and causing the U.S. dollar exchange rate to continue to fall.
At this time, banks in Europe also joined in, and they also saw the profits.
For example, Barclays, UBS, Royal Bank of Scotland, Deutsche Bank, Credit Suisse, Rabobank, etc., and even American commercial banks such as Citigroup, JP Morgan, Bank of America, etc. have also joined in.
In the eyes of those capitalists, only profits are real and they do not care about the life or death of other enterprises.
With the addition of these banks with huge assets, the exchange rate of the US dollar cannot rise at all. Feng Yu's main selling behavior of US dollars is also in Europe, through lending and selling through these commercial banks.
At that time, many of these banking giants were also speculating in crude oil. They believed that if the U.S. dollar fell, crude oil would continue to rise, so it was in their best interest to sell the U.S. dollar accordingly, not to mention that they believed that this could stimulate financial markets such as stocks.
As a result, the investment of Fannie and Freddie Group once again suffered losses, and the losses were very large.
In addition, insurance companies and financial companies have continued to go bankrupt during this period, which has caused the debts of Fannie and Freddie Group to continue to increase, the value of securities has continued to decrease, and their losses have become larger and larger, and they are almost unable to cover up.
At this time, those European commercial banks once again played a cruel trick, which was to increase the interbank interest rate, which is the interest rate on lending between banks and other financial institutions.
This caused the lending interest rates of Fannie and Freddie Group to rise sharply, making their losses even greater.
Of course, as inter-bank interest rates increased, Feng Yu and the others suffered increasing losses from selling US dollars, but Feng Yu didn't care.
These losses can be earned back with investments in other markets. For example, short-selling investments in the U.S. stock market can allow them to make up for these losses.
What's more, Feng Yu's most profitable investment is crude oil futures.
At this time, crude oil futures were still falling, and Feng Yu and the others could see profits rising from their short-selling contracts almost every day.
If a company suffers too much loss, its stock price will naturally fall rapidly.
Last year, the share price of Fannie and Freddie Group exceeded 60 US dollars. It began to fall at the beginning of this year. At that time, Feng Yu also took the lead in short selling.
After the stock price was suppressed to about 20 US dollars, the U.S. government began to inject capital and pulled it up a bit. However, as the investment of Fannie and Freddie Group continued to suffer losses, their operating losses increased, and the market continued to fall. Their The stock price has naturally fallen all the way, and is now only a little over one dollar.
In other words, the market value of the two companies has shrunk to one-sixtieth, and their wealth has evaporated by more than 98%.
Bank of America Merrill Lynch, Lehman Brothers, etc., whose wealth has also evaporated greatly, have all gone bankrupt, but Fannie and Freddie Group are still persisting because they are Fannie and Freddie Group and the largest sponsor of the US government.
Huge losses of listed companies have a huge impact on stock prices. If the stock price is less than one dollar for thirty consecutive trading days, then they will be forced to delist, and it will be difficult to turn around.
At this time, they chose the same path as WorldCom, Enron and other companies, which was to commit financial fraud. Fictitious profits and concealed losses so that investors would not completely lose confidence in them.
A few years ago, Fannie and Freddie Group also had a financial fraud scandal, but at that time they concealed their profits. This was accepted by investors, which at least proved that the two companies were very profitable, and they just wanted to pay less. They are just investors. In fact, the profit that was concealed was not direct income, but book income.
But this time it was different. This time they were concealing losses and not wanting investors to withdraw their capital, otherwise they would be completely screwed.
So the giants of Fannie and Freddie Group all found someone to start accounting, increase profits by one to two billion US dollars, and hide some losses, so that the financial situation becomes much better.
It makes investors think that Fannie and Freddie are only temporarily in trouble and will soon get out of it, giving investors high returns again.
Unfortunately, Feng Yu knew about this matter in his previous life. After careful verification in this life, he also found tangible evidence.
Then the next step is simple. If this scandal is exposed, the share price of Fannie and Freddie Group will inevitably plummet again.
[Fang and Freddie Group jointly concealed losses. Will the history of Enron, WorldCom and others repeat itself?]
[Fang and Freddie Group falsely reported profits, and investors were deceived by them!]
[FNM and Freddie Group are on the verge of bankruptcy. Will mortgage interest rates rise sharply again?]
[The bankruptcy of Fannie and Freddie will trigger a financial crisis, and the U.S. economy will suffer the heaviest blow!]
Multiple pieces of news were reported on the Internet, in newspapers, and on television, and quickly spread throughout the United States and around the world.
For a while, this news even suppressed the limelight of the Chinese Olympic Games. According to the rules, the Olympic Games are the darling of the media during the Olympic Games, but this time it is different.
Xiaobu Shi, who was being interviewed by the media, still told reporters with a smile that this time American athletes will continue their past achievements and break multiple Olympic records and even multiple world records.
He likes a certain athlete very much and hopes to have dinner or something with him when the other athlete wins and returns home.
But at this time, he went to see the people in his office waving to him from behind the reporter, which meant that something urgent had happened.
Someone stopped the reporter and interrupted the interview. Xiaobu Shi walked over and asked, "What's going on?"
He looked unhappy. Today, an American athlete broke the world record. It was rare that there was something that made him happy during this period. He was very happy.
"Mr. President, take a look, a major scandal has broken out at Fannie and Freddie Group!"
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