US Considers Takeover Of Fannie Mae, Freddie Mac

Alarmed by the growing financial stress at the nation's two largest mortgage finance companies, senior Bush administration officials are considering a plan to have the government take over one or both of the companies and place them in a conservatorship if their problems worsen, people briefed about the plan said on Thursday.

The companies, Fannie Mae and Freddie Mac, have been hit hard by the mortgage foreclosure crisis. Their shares are plummeting and their borrowing costs are rising as investors worry that the companies will suffer losses far larger than the $11 billion they have already lost in recent months. Now, as housing prices decline further and foreclosures grow, the markets are worried that Fannie and Freddie themselves may default on their debt.

Read the whole story here.

Comments

[EinChicago]

This story really is the best example of how paranoid and moronic teh financial sector has got. A reporter at the WSJ reports that his sister's cousin's girfriend's brother's best friend's dog walker heard from his mother's friend's sister's uncle's hairdresser that some summer intern's at teh department for lower western south dakota tourism lobbyists had some informal discussion about this in the men's room and "whammo" 24 hours later everyone is reporting it as fact.

Anyone notice that teh WSJ never said anythingh about who had these discussions or when tehy took place. Just that the reporters heard that 3 people claimed they had (anonymously, of course).

Smacks ofanother whisper campaign by the stock bears. If you want to locate teh "anonymous" source for the WSJ, just pick the 3 people who held teh largest short positions on these shares on Wednesday.

[MonicaL]

Well, Pelosi, Reid and Company sure made a mess outta this one. I hope this doesn't hurt Barack.

[levibatgirl]

KBAR is in the middle of a delusional manic state thinking he has influence here.

Take your meds bipolar boy.

[KBAR]

hinking he has influence here.

Nope. Just 'pricking' DimLib's and exposing their ignorance on any economic subject.

What they choose to do with it is up to them.

[Chavez08]

What kind of "education" do you have on "economics"

You speak as if it's a science when even recognized "economists" admit that it's not. I've taken economics (4.0 across the board, BTW) but no one in acadamia could chalk-talk to the merits of "Globalization" (i.e. how does it benefit society or security) This fell on deaf ears. Those with knowledge who are not profiting from pro-Reaganomics rhetoric are condemning Neoliberalism/Globalization/"Free markets", whatever you want to call it, as simply designed to provide slave labor for a handful of cunning Capitalists to create an Imperialistic "trade machine".

The only "economists" that even remotely gave rational explanations for wealth were of the Mises ilk but the unfettered market system they push for has long been proven disastrous for a free Republic. If I had time, I would be more than happy to volley low level with you over productivity, GDP (redefined), GNP and even at a higher level your rationalization for consolidation of wealth that was criticized by Adam Smith as well as Marx.

Bottom line: Unchecked Capitalism failed miserably and those who are benefiting from this system are pushing fascist police-state oppression and corporate-sponsored misinformation as a way to keep Americans from choosing an alternate system.

If you want to use discredited, smokescreen formulas and opaque elitists terminologies as a way to make yourself feel better about Market Communism, have at it.

...but don't try to peddle your nonsense as "education".

[NickNas]

You have to excuse this guy..hes got this confused with a Instant messanger service as well. It must really be tough knowing everything and all people do is laugh at you. It happens when people get FACTS and OPINION and the right of EVERYONE to have an Opinion confused. Maybe when the hangover pass' he will realize how silly he looks.

But then maybe not. it really doesn't matter either way LOL It is just fun seeing his meltdown. I picture a red face and alot of foot stomping LOL.

I am so glad this Forum has that IGNORE feature : )

[CrazyDogLady]

Notice it's the Federal Reserve (a private and unregulated bank) that continually lowered interest rates that enabled the mortgage frenzy that are now claiming Freddie and Fannie are insolvent..

Freddie and Fannie are NOT members of the Federal Reserve and have performing loan portfolios...however under government conservatorship they could be forced to take on the non-performing jumbo/subprime loans that Federal Reserve member banks (Chase, Wachovia, Citi, etc.) ALL have in their portfolios - which WE the taxpayers would then get stuck with the bill.

This is NOT corporate welfare for Freddie or Fannie - this is using Freddie and Fannie via the US Taxpayer to bail out the Federal Reserve Member Banks....it's convenient that just as of April 1, 2008 Congress extended the GSE loan limits from $417,000 to $729,750..so they could buy Jumbo loans from JP Morgan Chase, Citi, Wells Fargo and WAMU...(ALL Federal Reserve Member Banks)

Freddie's loan portfolio is low risk:

-- Average borrower credit score: 721

-- Only 4% of loans are to borrowers credit score less than 620.

-- Interest Only loans make up 9% of their portfolio...as those home values have dropped - loans < 80% LTV should carry PMI (Private Mortgage Insurance) which protects Freddie/Fannie.

-- ARMS make up only 1% of their portfolio - nominal impact when they reset...

LESS than 1% of their loan portfolio is significantly delinquent (>90 days)

Be afraid of the FED not Freddie or Fannie...

[Chavez08]

Will someone please tell KBAR to stop apologizing for Corporate Socialists?

[MajorKong]

Or at least tell him to switch to decaf.

[KBAR]

top apologizing for Corporate Socialists?

I'm NOT apologizing for anyone. I'm educating the IGNORANT on the historical and practical role of Freddy and Fanny. Something is short supply here. You should be paying me for the tutoring but I choose to offer it as a public service.

[Chavez08]

Do you mean Fox News doesn't pay you a dime??? You're getting screwed!

[Mike169]

The failure of the private sector?

[andyboy]

KBAR,

Could you tel us the story about the "perfect storm" that hit the financial markets? Please.

I love fairy tales.

[Gma11]

Praise be to thee, oh Great Deregulators.

[BobsNotWorking]

So many comments here seem to be missing the underlying point. The real underlying issue is the money supply. All of our money is based on debt. If lenders quit lending (which is what is currently happening and referred to as the "Credit Crisis") the money supply begins to shrink. When the money supply shrinks the economy shrinks with it. Recession is never far behind. Take 47 minutes of your day and watch this video. You'll come away with a much better feel for why our credit markets have become dysfunctional:

http://video.google.com/videoplay?docid=-9050474362583451279

[NicholeWebb]

This was an excellent education. Thanks for posting it, Bob!

[MajorKong]

Unfortunately we pretty much have to bail them out. Otherwise the whole mess comes crashing down and we're screwed worse than we already are.

[ema]

Is this a bailout? It is a takeover. I think that is a little different. Wouldn't ti be putting Fannie back where it started -- as a government agency?

[Chavez08]

No we don't. The victims of this Reverse Robin-Hood system (97% of America) will be in the same position either way - slavery, poverty and no healthcare to battle the multitude of health issues created by industrialization.

The recent actions taken by the Fed are only serving to generate a smokescreen around the categoric failures of Neoliberalism to [try] to fool other markets into thinking the Fed has everything under control.

Let it die. Most Americans will be much better off with a new system in the long run, only first we need to bury Friedmans' books in a landfill where they belong and organize assertively for labor and consumer rights before making trade agreements.

[levibatgirl]

Kbar is a fascist enabler having a melt down for his corporate masters at HuffPo this morning.

[KBAR]

corporate masters at HuffPo this morning.

?
Where's my check? I'm ENTITLED!

[javaman]

more coreporate welfare.

[levibatgirl]

Calling all trolls!!!!

Report to HuffPo and defend your corporate masters. How can we complete building the road fascism without the marriage of the corporate world and govt?

Put on your brown shirts and jack boots. Then report back to us and bring your knee pads!

[KBAR]

Is that an admission that you have NO CLUE of the role Freddy and Fanny?

[andyboy]

KBAR,

It's simple ace.

They help empty out the Treasury for fat-cat sub prime loan peddlers so they can make some huge short term profits leaving the entire real estate market in a state of collapse.

Just ask Phil Gramm dude.

Oh I know if only all those stupid people just hadn't signed those loan papers all of this would have been avoided.

Please teach us some more oh Swami....

[Chavez08]

Why does KBAR hate America?

[KBAR]

Hey there! How's thing in the Peoples Republic of the Netherlands?

Oh! And thanks for the introduction to your mother. She was just great. I really liked that trick she did after she took out her teeth. Very smooth. Got a sister?

[levibatgirl]

You're supposed to accuse US of personal attacks sissy boy.

Get your talking points straight. Or are you just having a melt down?

LOL

[MajorKong]

Grow up little boy.

[Chavez08]

Heads up, FUBAR. The "your mother" line of insults may be uber to you toilet cleaners in Communist China, but in the U.S., where Liberal Patriots live, we retired those worn out lines in the 80s next to "Where's the Beef?" and "Got a match?"

Thanks for playing, now go back to your Maoist studies before you get in trouble again.

[bija]

Is the government going to bail out the crooks again or actually help the victims?

[KBAR]

Who are the crooks? Name a few. Who are the 'victims'? A few of those too, please.