Government Rescues Fannie and Freddie
The federal government will take over Fannie Mae and Freddie Mac, our largest and most troubled mortgage finance companies, with an estimated taxpayer price tag of $25 billion (one source told the New York Times that the number was a modest guestimate, though). In one of the county’s most expensive bailouts, the government can put…
The federal government will take over Fannie Mae and Freddie Mac, our largest and most troubled mortgage finance companies, with an estimated taxpayer price tag of $25 billion (one source told the New York Times that the number was a modest guestimate, though). In one of the county’s most expensive bailouts, the government can put up $100 billion for each company should they need cash — they handle about half of the country’s mortgages — and will encourage them to shrink their holdings; the Treasury can buy the two companies outright for a small pricetag, and is already changing the management team. The Fed sees the buyout as the silver bullet for the housing crisis, and already foreign markets have rallied since the announcement. Will it work, do you think?
In Rescue, U.S. Takes Over Mortgage Finance Titans [NY Times]
Fannie Mae. Photo by NCinDC.
I continue to submit that the Fannie/Freddie news will not affect NYC real estate. When the short-term noise subsides Fannie and Freddie will be doing exactly what they were doing before the bailout. If anything, they might get more conservative, which would actually be a net negative. Beware the law of unintended consequences.
Dave–an October 87 type event would still be pretty dramatically bad no?
But seriously What. If this action were viewed by the collective knowledge of the world, i.e. the markets, then the dollar would be getting pummeled and the world would be selling treasuries….neither one is happening today.
I still think we’ll have an October ’87 crash that will rebound quickly but nothing like a Great Depression.
A major crash and a major depression are two completely different things.
There’s too much cash sitting on the sidelines in money market funds that would start buying with a 500 point plus market fall. Last week the market fell about 800 points in 3 1/2 days and has made up half of that in the past two days.
dave – let’s see where MBS spreads go over the next few weeks – that’s the real litmus test.
I’m going to go off. This would be such a day for a good rant but, there is a bigger problem. I realized that people just don’t comprehend the magnitude of this bailout. We are in serious trouble with our financial system and I’m still sticking to me original thesis of a major crash this fall that will rival the Great Depression. So far this year our deficit will be around 600 billion dollars and will raise our borrowing cost worldwide.
The Fannie Mae and Feddie Mac will go down as the biggest swindle of our lifetimes.
The What
Someday this war is gonna end….
11233–this is definitely when the switcheroo happens. Stay tuned.
Adam Dahill, a mortgage banker, posted this in the Forum a few minutes ago…
“Not sure if anyone is currently in contract or looking to refinance but interest rates are amazing today. They will probably go back up a little in the next few days as this may be a knee jerk reaction to Fannie and Freddie getting bailed out by the gov.
If you are paying 1pt you are at 5.625% on a 30yr fixed.
No points you are under 6% at 5.875% today on the 30yr fixed.
Call you broker or banker if you are currently floating to lock in.”
Evidence enough to anyone that 1. rates are going down and 2. that this bailout or nationbalisation (call it what you will) will do some good to the economy as a whole and the guy who can qualify for a mortgage.
Is this is where the what disapprears and Dow shows up?
Dave, after you prove me wrong, don’t argue with me.
I guess it just ended What if you can’t back up your statements with even the data that you provide.