Yesterday ... all our troubles seemed so far away ...
And oh yes, about six months ago, I didn't even know what in hell or who in hell Freddie Mac and Fannie Mae are or were! I would have guessed that Fannie Mae was a brand of chocolate candies, but Freddie Mac??? Maybe a hamburger ...
To get that detail out of the way, the nation's two largest mortgage finance lenders are the Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Mortgage Corporation, nicknamed Freddie Mac. Now be honest, how many of you knew even that much? Brother Richard in Connecticut, how about you?
Anyway, they have operated since 1968 as government sponsored enterprises (GSEs). Slick, huh? These "companies" are ours. Actually Fannie Mae was originally a Franklin D. Roosevelt invention to permit Americans to get back into home ownership and it wasn't privatized until Lyndon B. Johnson pulled that off in 1968.
The federal government, which in March rescued investment bank Bear Stearns to avert a collapse that threatened global financial markets, now faces a similar dilemma at Fannie Mae and Freddie Mac, which own or guarantee almost half the nation's mortgages.
To make matters more interesting, Fannie Mae and Freddie Mac are the only two Fortune 500 companies that are not required to inform the public about any financial difficulties that they may be having. In the event that there was some sort of financial collapse within either of these companies, U.S. taxpayers could be held responsible for hundreds of billions of dollars in outstanding debts.
A recent investigation by the Justice Department and the SEC into the accounting practices at Freddie Mac revealed accounting errors in the amount of 4.5 to 4.7 billion dollars and resulted in the termination of three of the company's top executives. Ongoing investigations by Congress, particular the House Finance Services subcommittee that oversees the activity of GSEs, will determine the future role of Fannie Mae and Freddie Mac and the secondary mortgage market that they dominate.
Thank God for those crazy Iranians and Israelis! This would be earth-shattering news were it not for my previous posting.
Ref my previous posting I think the word is "Tribulation."
posted by Dr. Joe @ 10:35 PM
2 comments
2 Comments:
Sickening isn't it? Banks, the Federal government and especially the two together cannot be trusted.
The bail out makes me want to vomit. What is this? A gift from you and me the tax payers to the super rich?
I'm a capitalist. In a true free market society, problems get eaten by the market, not picked up by the tax payers.
You're right! This is even a perversion of ssocialim and certainly something that "true" market conservatives must (and do!) abhor.
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