Posted on 11/07/2009 7:31:57 AM PST by reaganaut1
Fannie Mae and Freddie Mac are burning a huge hole in the Treasury's pocket. But the Obama administration is getting something very valuable in return: the ability to provide immense support to the housing market with only limited interference from Congress.
The credit crunch has displayed yawning democratic deficits, like the inability of Congress to get a proper handle on the Federal Reserve's emergency lending programs. But with Fannie and Freddie, it is the Treasury that gets to freely commit massive amounts of money. Both companies have bought most of the mortgages written in America this year and are modifying large amounts of loans to keep people in their homes.
This matters to investors. From a macroeconomic perspective, it is unhealthy when the government faces few checks when pouring billions of dollars into one sector of the economy, in this case, the housing market. The Treasury has committed up to $400 billion to keep Fannie and Freddie solvent. The two have already received or requested over $110 billion of that total.
Legislation passed last year puts no dollar limit on how much the Treasury can plow into Fannie and Freddie. Granted, Congress signed off on that bill, and the Treasury does have to explain its injections to Congress. But legislators may look back at one of the biggest blank checks they have signed.
(Excerpt) Read more at online.wsj.com ...
It’s ok...this will just destroy the middle-class which got that way because of ‘White-Privelege.’
Correct me if wrong, but isn’t this the very unprincipled mindset that broke the economies back to start with. If these two programs of the left aren’t done away with and soon, they will indeed do away with us and what remains of an economy.
There are web sites dedicated to instructing homeowners how to hold on to their home through foreclosure. The first step is filing for a six month extension. The second and third step is the same. You make no payments during this time, and live in the house for free. When the bank finally refuses the extension and puts the house up for sale, the wife or parent comes in and buys it at a rock bottom price, that the buyer can afford.
I’ve been around a long while and have been a student of all things economic and political. I scoffed at the Dems, of all people, shouting from the roof tops how THEY would fix the disorderly spending of Bush. The Dems are and have always been the irresponsible party of tax and spend. And, as soon as the got the White House and a lock on things, they gave the country an impotent stimulous pkg full of pork and spread mostly for political pay offs. Now our deficit is truely out of control...and what’s up for their next illogical comedy act....Obamacare and Cap and Trade.
We need each congress and senate Dem, who votes for any more of this folly, targeted and attacked in the 2010 elections. Start with the Blue Dogs and any others in swing states. We need to reduce the Dem members of congress to freeze the un-american agenda and checkmate the empty suit in the White House.
the housing market is just being reinflated. The pain of the next burst will be even greater.
My friend’s family just bought a house with nothing down and little income, just like before fannie and freddie are doing exactly the same things that got us into this mess.
Lean to read champ. I wasn’t talking about tarp....i spoke of the stimulous.
I know what it was/is and which Admin was in charge at the time of the tarp fiasco.
Sheesh, what a putz. Read before you engage your keyboard.
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