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Friday, August 20, 2010

Five Trillion More Dollars to Fix Freddie Mac and Fanny Mae?


Fannie Mae and Freddie Mac have become gigantic financial black holes that the U.S. government endlessly pours massive quantities of money into. Unfortunately, if the U.S. government did allow Fannie Mae and Freddie Mac to totally implode, both the mortgage industry and the housing industry in the United States would completely collapse. So essentially the U.S. government finds itself between a rock and a hard place. Prior to the financial crisis of the last few years, Fannie Mae and Freddie Mac were profit-seeking private corporations that also had a government-chartered mission of expanding home ownership in America.

But now that they have been officially taken over by the U.S. government, they have become gigantic bottomless money pits. It is hard to even describe just how much of a mess Fannie and Freddie are in. However, the unprecedented intervention by Fannie Mae and Freddie Mac in the mortgage market over the past couple of years has been about the only thing that has kept it from plunging into absolute chaos.

So what does the future hold for Fannie Mae and for Freddie Mac? Well, according to one estimate, it could take another 5 trillion dollars to "fix" Fannie Mae And Freddie Mac.'

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1 comment:

  1. Can you say socialized housing? Destroy the housing market, "force" FHA/Fannie/Freddie to pick up the slack, bankrupt and destroy buyer's creditworthiness, then offer "wonderful leasing opportunities" via the government.

    Stalin is smiling... :(

    ReplyDelete

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