This is a Really Big Deal
Fannie Mae is in a spiral and Freddie Mac is struggling as well.
BOSTON (MarketWatch) — Shares of Freddie Mac ended a wild session Friday down about 4% after losing more than half their value earlier in the session as the market battled the federal government for the hearts and minds of investors.
A report that the Federal Reserve will allow the mortgage giant to access the discount window to relieve capital pressures rallied the share from more than 50% losses into positive territory late in the session, before they slipped back into the red.
Both of these programs are what are known as “Quasi-Governmental” programs.
The reality is that almost 70% of mortgages in this country are touched (or stained) by at least one of the colossal failures. What do you suppose the government plans to do to fix this?
Fannie Mae and Freddie Mac trade remained under severe pressure amid prospects that the mortgage giants, which help make the American dream of home ownership possible for millions, will need to be bailed out by the U.S. taxpayer.
This suggested solution is a train wreck for the tax payer.
I just received an email asking for clarification; well actually a straight forward question, “COB, Just WTF is “Quasi-Government” anyway?”
Sadly enough, I have had cause to burn many brain cells on Government Sponsored Enterprises which is one of many categories of evil spawn of QG programs.
So, I will try to write a Readers Digest version of this beast, so the rest of you can erase a small part of your mind and fill it with just what happens when the government tries to help. As I am sure TSO can attest, trying to make something as intentionally convoluted as legislation make sense is no small feat. But I’ll take one for the team and try.
For this post, just remember that this Fannie Mae and Freddie Mac implosion has the potential of doubling the national deficit over night. Think about that for a second and then go get a drink.
Hell, it’s Friday, I am!
Category: Politics
COB6 As a mortgage banker for last 15 years I’ll look forward to your Fannie Mae, Freddie Mac blog.Of equal con cern is this afternoon’s Fed seizure of IndyMac Bank 2nd largest bank failure in U. S. history.Always happens on Fri.
afternoons to alleviate depositor run on assets.Phil Gramm told concerned depositors many of whom hold uninsured assets to “stop whining”Sorry,couldn’t help myself.Enjoy the drink and the weekend.I’m on the way myself.Richard
Just noticed Jonn’s new blog and your response from the bar I guess re IndyMac failure.”Blame the messenger” You guys are great!
Aren’t both of those places where the Democrats put their faithful old party hacks out to stud?
richard wheeler,
I figured you’d have a job that doesn’t produce anything of value for society, but sucks blood from those that do.
Raoul Thanks for the good laugh.You made my weekend!
I remember in the late 70’s, when the peanut farmer had caused interest rates to go so high. And mortgage lenders, wanting to make loans, came up with the low interest/balloon payment scheme. With a 30 year mortgage, isn’t that balloon busting time upon us? Those of us who were smart enough to avoid the trap are now expected to bail out those who fell for it? I also saw, in the late 80’s, a mortgage lender and my “bitch from the bronx” ex-wife as they invented income for her in order to qualify for a re mortgage on the house that she couldn’t afford from day one. Thankfully, from the time we met, I avoided merging our incomes. If ya can’t pay today, how in hell will you pay tomorrow? Watching the 70’s and 80’s, caused me to swear to never ever finance anything. Works for me, and today I can claim that I have no debt; making me wealthier than nearly anyone I know.
nuf sed