[Marxism] Fannie and Freddie Get Seized.

[S. Artesian]

This is, on a grand scale, a global scale given the amount of GSE debt held 
by China, Japan, etc. the same as the FDIC taking over failed banks or S&Ls, 
except there isn't even a shred of industry financed insurance to absorb a 
portion of the loss.

I actually think this is a tougher deal than the FRB's financing of JP 
Morgan Chase's takeover of Bear Stearns, although the sheer size of the 
GSE's dictated direct Treasury Dept. intervention.  Tougher on whom? 
Certainly not the bond traders. Tougher on institutional investors who hold 
app 75% of the common shares. Tougher on the pension funds which have moved 
up into the numero uno position in equity holdings.

As far as riskier mortgages-- yes Fannie and Freddie did engage in that, 
particularly after the Congress removed the restrictions on financing the 
jumbo (>$400,000) mortgages.  I believe that about 10% of GSE mortgages were 
reported as greater than 30 days overdue and/or in foreclosure.

Now, what to do about the Federal Housing Administration, and the Federal 
Home Loan Bank Boards-- FHA has issued 23% of all new mortgages so far this 
year, up from 1.8% in 2006,  and member banks have tapped the FHLB for 
billions since 2007.
----- Original Message ----- 
From: "Joaquin Bustelo" <jbustelo at gmail.com>
To: <sartesian at earthlink.net>
Sent: Monday, September 08, 2008 1:54 PM
Subject: Re: [Marxism] Fannie and Freddie Get Seized.


> Gary writes: This presumably is "nationalisation" by another name?