Monday, July 14, 2008

Fannie Mae and Freddie Mac

The Treasury Department and the Federal Reserve are moving to shore up Fannie Mae and Freddie Mac, the "government-sponsored entities" that either own or guarantee about half of U.S. mortgages.

How much is half of the U.S. mortgage market? Try five trillion dollars.

One of the reasons Fannie and Freddie have grown so large is that they are quasi-government agencies. They're able to borrow more cheaply because of the belief--accurate or not--that the federal government would back them up in a pinch. And sure enough, that's exactly what the Feds are doing.

But reading between the lines, what I get out of this NY Times article is that the real fear is that foreign governments and other overseas investors are growing leery of U.S. investments. And if they don't continue to send billions of dollars our way every month--money used to support all of our debt spending--the U.S. economy would be in a full-blown crisis.

We're on dangerous ground, folks.

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1 Comments:

Anonymous Anonymous said...

This bailout of Freddie and Fannie is counterproductive. Another congressional initiative, the Mortgage Bailout, will tax Freddie and Fannie to the tune of $530 million/ YEAR. So Congress wants to bail out an institution and tax it as well? What’s going on? Call your senators/representatives and tell them: Back off the Mortgage Bailout Bill and Back off Bailing out Fannie and Freddie Mac!
http://www.freedomworks.org/newsroom/press_template.php?press_id=2585
Blue Dog House Contact info:
1-866-887-5841
http://www.freedomworks.org/newsroom/press_template.php?press_id=2580

11:25 AM  

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