Gotta disagree.
Fannie/Freddie are not allowed to buy mortgages in the sub-prime space - ie, a “conforming” mortgage that is made by some lender and securitized is not supposed to be picked up by Fannie/Freddie.
So what did they do? They went out and bought a bunch of CDO crap with sub-prime in it. Morons. Completely, totally thwarted the risk profile set out for them.
Because these GSE’s have the imprimatur of the faith/credit of the US government, you, I and every other taxpayer are on the hook for this stupidity.
Doubly so for the residents of states who had pensions investing in Fannie/Freddie stock/bonds/preferred.
Fannie/Freddie need to be peeled open, their books laid bare and their management held up to scrutiny. It will take a court to do this, since the US Congress has been unwilling to exercise their oversight authority to the extent necessary to clean up the books of these GSE’s.
I hope all 50 states sue to open the books of Fannie/Freddie.
US Congress has been unwilling to exercise their oversight authority
Really? Just how much are the tax payers paying for this poorly run entity? Does Government run health care have similar risk? Or will Senator Obama and Senator Clinton exercise their heath care oversight authority?