Skip to comments.Questions Surround Fannie, Freddie
Posted on 12/30/2009 7:09:36 AM PST by reaganaut1
The government's move to ease the limits on the securities holdings of Fannie Mae and Freddie Mac has ignited a debate among analysts about what the companies will do with their longer leash.
When the Treasury Department took over Fannie and Freddie last year, one of the requirements they set for the companies required them to begin shrinking their portfolios of mortgages and related investments, which total a combined $1.5 trillion. The idea was to rein in the companies' size and growth.
But last Thursday, the Treasury eased that requirement, meaning the companies won't be forced to sell mortgages next year into an already weak market and could even buy mortgages on the market, which could help hold down interest rates. The Treasury also suspended for the next three years the $400 billion cap on the bailout subsidy that the government will offer. That could give them more flexibility to modify mortgages without worrying about taking losses.
"In a long-term way, it promotes nationalization of U.S. mortgage finance. We have increasingly gigantic, increasingly federal agencies eating up every mortgage out there," she said.
[...] For years [Fannie and Freddie have] earned additional profits and generated controversy by maintaining a large investment portfolio filled with mortgages and related securities.
The most controversial part of the Christmas Eve announcement was the decision to erase any caps on the amount of Treasury money that the firms can take. That gives the mortgage-finance companies and their government masters a much freer hand to respond to the housing crisis in the year ahead, possibly by moving more aggressively to modify troubled loans.
Some analysts said the companies now have greater flexibility to pursue more expensive loan modifications, including by writing down loan balances, which would have generated losses, requiring more government cash.
(Excerpt) Read more at online.wsj.com ...
Republicans need to talk about winding down the bailouts, including this one.
‘Bondzilla’ must have been bound by chains, weighted by concrete, and cast into the depths of the Mariana Trench.
My proposal would be to “clean up” both entities as much as possible, and then completely privatize them with only as much regulation and oversight as any other (pre-bailout) financial institution.
You don’t seem to get it.
After the mortgage induced financial crises almost caused the collapse of the entire US Financial system, it was clearly shown that the Demo Party encouraged Fanie and Freedie handouts of mortgages was the root cause.
Obama wants to continue. At ACORN Obama sued CITI to make sure there was no racial discrimination in handing out mortgages to people who couldn’t pay them, as PRESIDENT Obama continues to want to do the same thing.
The big picture is becoming obvious to the most casual observer, the radical liberals want to destroy the US by destroying the economy, what better way than poisoining the US Economy with rotten loans? It is a conspiracy.
Fannie will be protected at all costs. There’s no way Obama or Holder will allow Franklin Raines, director of FM during the Clinton years, to be the fall guy for the sub-prime mess.
The answer is:
What do I win? ; )