Government may take over FNMA and FHLMC this weekend

alaskaguy · 09-05-2008, 11:01 PM

The Associated Press is reporting that Fannie Mae and Freddie Mac are expected to be taken over by the government as soon as this weekend.

Link:
Gov't may soon back Fannie, Freddie: Financial News - Yahoo! Finance

alaskaguy · 09-05-2008, 11:10 PM

The Chinese central bank holds more than $340 billion in Agency debt from these entities.

http://64.233.169.104/search?q=cache...nk&cd=10&gl=us

More details on the potential takeover courtesy of the Wall Street Journal:

Link:
U.S. Near Deal on Fannie, Freddie - WSJ.com

Cyclonepride · 09-05-2008, 11:57 PM

I was about to post a thread on this, but my title was going to be.....oh ****.

That is a really, really bad deal.

superdorf · 09-05-2008, 11:57 PM

I understand the this, but my question is... why?

Interest rates are still incredibly low by most standards... Right? Weren't mortgage rates in the teens to 20% in the early to mid 80's?

I just don't understand why the Govt. continues to throw money around like this.

Cyclonepride · 09-06-2008, 12:01 AM

As an aside, if serious, and I mean heart attack serious, financial reform does not happen after this cluster****, then Washington DC should be marched upon with torches and pitchforks. The fact that this was allowed, no, encouraged to get this far is a travesty of epic proportions.

alaskaguy · 09-06-2008, 12:04 AM

If you want to know how Fannie Mae and Freddie Mac have survived scandal and crisis, consider this: Over the past decade, they have spent nearly $200 million on lobbying and campaign contributions.

Link:
Fannie, Freddie spent $200M to buy influence - Lisa Lerer - Politico.com

superdorf · 09-06-2008, 12:04 AM

You freaking guys are gonna turn me into a conservative.

superdorf · 09-06-2008, 12:05 AM

Originally Posted by alaskaguy

If you want to know how Fannie Mae and Freddie Mac have survived scandal and crisis, consider this: Over the past decade, they have spent nearly $200 million on lobbying and campaign contributions.

Link:
Fannie, Freddie spent $200M to buy influence - Lisa Lerer - Politico.com

So now they spent $200M of tax payer money... to get bailed out by more tax payer money?

jumbopackage · 09-06-2008, 12:20 AM

Originally Posted by superdorf

I understand the this, but my question is... why?

Interest rates are still incredibly low by most standards... Right? Weren't mortgage rates in the teens to 20% in the early to mid 80's?

I just don't understand why the Govt. continues to throw money around like this.

Interest rates are a tricky thing. The government should REALLY raise them right now to help curb inflation. The downside to that is that raising them also slows down the economy, and when you're teetering on recession, that's a tough call. Fortunately there hasn't been a wage-price spiral that is the really bad news when it comes to inflation. If that happens, then you end up where we were in the late 70s through the 80s.

Fannie and Freddie are in trouble, and their collapse would be devastating to the economy. I think it was inevitable that the government step in at some point. They both need to go away, IMO.