Now I really hate playing the blame game but this makes be angry. Years and years ago when Fannie and Freddie were printing money for their shareholders and bringing down mortgage rates it was all good, and so they kept expanding their portfolios because as a publicly traded company, that was what they were suppose to do. By buying trillions of mortgages they 'crowded out' other natural purchasers of bonds, perhaps forcing them in to investment strategies and products that were not optimal. ( think Alt A, subprime mortgages, and the like) I have done this rant before in one of my other dozens of entries on these mortgage giants but every time I see another headline about how much money they have lost I lose it. $259 billion. THIS WAS AVOIDABLE. The responsibility for oversight of these organizations was by people that are still in power today, like Barney Frank. I would argue that if Fannie and Freddie did not exist in the form they did, we would not have had this financial crisis. Were they the only players? No of course not. But go down the path of imagining the financial world, and especially the securitized world, without the likes of them, and I don't think you would end up where we are. Note that no other country has the likes of Fannie and Freddie, and they did not experience a financial crisis like the US did.
$259 billion and rising. It is all just so sad. Regarding this foreclosure mess. My gosh.. I don't even know where to start. I am really worried this will all lead to the next inning of financial market chaos.
For all the blogs I have written on Fannie and Freddie go to my web-site and search Fannie.