The Economy: Mortgage Mayhem
Writing in Reuters, Pedro Nicolaci da Costa analyzes the impact to the economy of a potential Freddie-Fannie bailout: “Together, Fannie and Freddie control nearly half the U.S. mortgage market. The slide in the companies’ publicly traded shares has been staggering. Fannie Mae’s stock has lost most of its value, swooning from peaks around $70 in August of last year to their current $9.
Freddie has fared even worse. Its shares fell Friday morning to the price of a gallon of gasoline.”
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July 11th, 2008 @ 1:13 pm
Says Robert Reich: “As a practical matter, we’re facing a Bear Stearns squared. Fannie and Freddie are way too big to fail — especially now. There’s no question the government will have to take over the companies, which means taxpayers will get stuck with the tab yet again.
Here we have another example of socialized capitalism. The executives of Fannie and Freddie have been among the best paid in all of corporate America. We’re talking tens of millions a year in CEO pay alone. Fannie and Freddie are treated like giant investor-driven entities as long as they’re healthy and their investors and executives are doing well. But when they start to go down the tubes they become public entities with public responsibilities, the rest of us have to bail them out.”
http://robertreich.blogspot.com/2008/07/fannie-freddie-and-pending-taxpayer.html