“Senior officials from the Bush administration and the Federal Reserve on Friday informed top executives of mortgage finance giants Fannie Mae and Freddie Mac that the government was preparing to seize the two companies and place them in a conservatorship, officials and company executives briefed on the discussions said,” according to the New York Times.
Wow. This is going to be quite an expensive bailout – possibly in the tens of billions. The only upside is that “If the government plan succeeds, uncertainty in the markets around Fannie Mae and Freddie Mac could subside, making it easier for the companies to get access to funding at cheaper rates.”
Besides the trillion we will end up losing in Iraq, I think the lasting legacy of the Bush administration will be its lack of oversight over the lending community. So much money wasted…and so many lives disrupted. We can only hope that our next President will do a better job in this regard. But you have to wonder – how did both of these organizations make so many mistakes – and who were the folks in charge? I hope they aren’t going to get away with this!
Art,
You may want to do a little fact checking before making such an outlandish statement.
“Besides the trillions we lost in Iraq”
As of today, total spent is about 550 billion and counting….far less than “trillions”.
Eric,
Oops! You are right. Should have said “billions.” Here is what MSNBC has to say on the subject:
If you add these costs, and others, to the total tab, the cost of the war has jumped from $4.4 billion to $7.1 billion a month since the 2003 fiscal year, according to a paper co-authored in January by Columbia University professor and Nobel-prize winning economist Joseph Stiglitz, an outspoken critic of the war. The paper estimates the total cost could top $1 trillion.
Actually Art was right the first time. This MSNBC excerpt is confusing, but the Stiglitz study said it could be up to 3 trillion by the time all the interest is paid on the money we borrowed to finance the war, plus all the care that will be required for the 70,000+ wounded, and other stuff we haven’t paid yet but will have to. Here’s Stiglitz himself:
http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article3419840.ece
The impending takeover of FannieMae and Freddymac is but another sign of a deterioriating economy. Today’s paper reports Downey Savings ordered by “Federal Regulators” to raise capital, sell their foreclosed home inventory and halt payment of any dividends. A ride around the commerical office space in the John Wayne Airport area finds literal forests of office space for lease signs – that signals companies have gone out of buisiness or have cut back significantly. Housing market continues to be awash with foreclosures and much more inventory of homes for sale than buyers. It is really looking grim out there.
To quote the late Sen E. Dirkson: “A million here, a million there and pretty soon you’re talking about real money.” A MILLION, A BILLION, A TRILLION, I have no concept of these amounts.
According to the New York Times, Democrats blocked Bush’s Fannie Mae and Freddie Mac reforms so low income people with bad credit could buy houses.
”These two entities -Fannie Mae and Freddie Mac – are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, and the less we will see in terms of affordable housing.” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee.
http://strategicthought-charles77.blogspot.com/2008/09/democrats-blocked-bushs-fannie-mae-and.html