Fannie Mae and Freddie Mac cease and desist

Beneficiaries of a multibillion-dollar bailout, bumbling brother and sister duo Fannie Mae and Freddie Mac have been hogging all the headlines. But there is plenty of other news (most of it bad, natch) that has been overshadowed by one of the largest government interventions in the financial services industry since the Great Depression.

The Housing and Economic Recovery Act of 2008, which outlines revised mandates for Fannie and Freddie, also expands the scope of the 12 Federal Home Loan Banks and the Federal Housing Administration (FHA). Meanwhile banks large and small are scrambling to assess how much the collapse of Fannie and Freddie affects them, if at all. In Citigroup’s case, the company’s total exposure rang in at around $1 billion before write-downs, hedges, and asset sales.

Also lost in the hoopla was the news of the 11^th bank failure this year, Silver State Bank. Andrew McCain, adopted son of another big name in the news — the Republican nominee for president — sat on the bank’s board of directors and was a member of its audit committee until this past July. Zions Bancorporation subsidiaries Nevada State Bank and National Bank of Arizona have assumed Silver State’s branches and deposits while the FDIC sorts out the failed bank’s loan portfolio. The mortgage meltdown also claimed Luminent Mortgage Capital, which filed for bankruptcy last Friday, the same day regulators shut down Silver State.

But we all know after the fact which banks are going under. Figuring out which one is the next to fall is a different story. The FDIC doesn’t announce it is seizing a bank until it happens and doesn’t publish its notorious problem bank list. While rarely harbingers of failure, cease-and-desist orders are made available to the public, however.  Downey Financial, one of the largest savings and loans in the country, consented to such an agreement with the Office of Thrift Supervision (OTS), compelling it maintain minimum capital ratios, refrain from unsound lending practices (well, duh), and put a freeze on dividend payments and executive payouts.