Posted on 12/25/2009 10:07:22 AM PST by FromLori
As with many giants, it’s hard to cut Fannie Mae and Freddie Mac down to size. The government, which controls the mortgage behemoths, planned to shrink them by 10 percent in 2010. Don’t count on it.
Failure is unthinkable, even though both companies still rely on a $400 billion equity life-line from taxpayers. These are institutions with a combined $1.5 trillion portfolio of mortgage-related investments. Without their supply of financing for home borrowers with good credit, house prices would be lower – and more banks would be in trouble.
Yet in theory, Fannie and Freddie could still be allowed to wither away. When they were put into conservatorship in 2008, a special sort of bankruptcy, the plan was to cut back on their hedge-fund like investment portfolios beginning next year.
But it’s a big hole to fill. And the last thing any politicians want in an election year is for mortgage rates to rise, as they will if private demand falls short. So the government is not going to be in a hurry to let Fannie and Freddie add to the pressure on the weak housing market. They won’t start winding down their portfolios until house prices are much firmer. On the contrary, they will stand ready to act as purchaser of last resort.
Of course, in the long term it’s hard to see why government should be in the business of using tax receipts to prop up housing prices and make good on losses from mortgage defaults. That distorts everything about the housing business and adds to the state’s fiscal burden. But barring a government financing crisis, the long term wind-down for Fannie and Freddie isn’t going to start in 2010.
(Excerpt) Read more at blogs.reuters.com ...
They are still writing sub prime paper. What a joke this is!
ping related thanks taxpayers
www.reuters.com/article/idUSTRE5BN2ZI20091224
Yep and we get to pay for it.
IMHO, Fannie and Freddie were the number one cause for the collapse of our economy and our country. Everyone connected with Fannie and Freddie, especially Franklin Raines should be in prison. This is BS.
MOOOOve along herds. More cowbell? BIG GOVERNMENT is not too big to fail. Witness history.
Where can I get a job which description includes plundering it for a multi million dollar bonus??
Yep, at the link, that is the actual title.
Better them than the stinking bunghole government.
Gummit bonuses don’t count! Bawney Fwank is running the banks.
Mary Christmas
Fanny and Freddie are part of the thugocracy’s slush fund operation. They are the revolving door for taxpayer’s money that is distributed to leftist voters and operatives to be circulated back to Democrat gangsters in government. Try to touch them, and Democrat hit men will hand you your head faster than you can say ACORN.
As usual, Reuters does not mention that Fannie Mae and Freddie Mac stock owners lost $122 billion.
Enron stock owners lost $60 billion.
Five Enron executives went to jail.
No one will ever go to jail from Fannie and Freddie.
Actually it is a backdoor bailout to the banks that paid obama off he said it was his proudest accomplishment!
http://www.opensecrets.org/orgs/list.php?order=A
http://www.opensecrets.org/news/2009/07/jpmorgan-ceo-jamie-dimon-donat.html
U.S.gave ve up billions in tax money in deal for Citigroup’s bailout repayment
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/15/AR2009121504534.html?hpid=topnews
http://www.salon.com/opinion/greenwald/2009/04/04/summers/
http://www.economicpolicyjournal.com/2009/07/president-obamas-favorite-banker.html
http://www.nytimes.com/2009/07/19/business/19dimon.html
www.rollingstone.com/politics/story/31234647/obamas_big_sellou
“It’s a p.r. stunt,” says an executive at one of the banks that will be getting a dressing-down at the White House meeting. Executives from Goldman Sachs, JPMorgan Chase, Bank of America and Wells Fargo are expected to be among those in attendance.
http://www.time.com/time/business/article/0,8599,1947411,00.html#ixzz0aFudYQLF
www.examiner.com/examiner/x-6996-Louisville-Economic-Policy-Examiner~y2009m12d24-How-Does-Obama-Live-with-Himself
http://www.noquarterusa.net/blog/2008/09/21/baracks-wall-street-problem-is-now-americas/
Double Bubble=Double Dip
“Actually it is a backdoor bailout to the banks that paid obama off...”
Not so backdoor, is it? Fannie and Freddie are all about bailing out, buying bad debt with taxpayers money so the banks can be used for social engineering schemes by the thugocracy. “Affordable” housing is the cornerstone of Socialism and serfdom.
Guess so but he is just creating another bubble ...
U.S. Uncaps Support for Fannie, Freddie
http://online.wsj.com/article/SB126168307200704747.html?mod=WSJ_hpp_LEFTWhatsNewsCollection
But then again none of them are working out only a handful I believe and yet we still have to give the money for the banks not to take a loss so who is really gaining?
The Real Reason So Many Home Loan Modifications Fail
http://seekingalpha.com/article/176844-the-real-reason-so-many-home-loan-modifications-fail
The 400 billion cap was lifted today. Supposedly they’re nowhere near needing it, so why was the cap lifted? If fact, they’re not supposed to exceed 170 billion in the next 10 years, so why’d they lift the cap? Something really stinks.
It is a Trillion dollar problem already that is why it was lifted and it will be even a greater problem because they are doing it again.
Not a joke. To revolutionary socialists, private property is a ‘no-no’, and the current operations of Fannie and Freddie are like a huge Hoover vacuum cleaner sucking up as much middle class property as they can. Offering nothing down mortgages to people who cannot pay guarantees transfer of old Mrs. X’s paid off home to Fannie and Freddie, and, ultimately to the Fed Reserve itself as it guarantees many of Fand Fs’ bonds. To redistribute property, as Obama confesses is his desire, he must first get his hands on it first. We are watching the mechanism first hand. Watch the original version of Dr. Zhivago....the US is being more sophisticated to accomplish the same thing.
I agree with every word here.
Obama wants to be the Great Mack Daddy Landlord, renting to the masses.(serfs)
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