The federal takeover of the Fannie Mae and Freddie Mac – some call it the “nationalization” of the mortgage industry – is finally happening. Congrats to you, John and Suzy Taxpayer! You did it!
Oh yeah, it couldn’t have happened without your tax dollars. The takeover comes at a cost of $200 billion (with a b) to taxpayers.
On the plus side, the government insists that the takeover will bring some much needed solvency – and hopefully stability – to the housing market. This should mean more available mortage credit which should translate into slower home market slides (it’s clearly not going to single handedly turn around the real estate industry).
How will it happen? The takeover converts existing Fannie Mae and Freddie Mac debt into government debt. Just like that – magic!
This additional $200 billion debt was not considered when estimates of the federal deficit were released earlier today. The Congressional Budget Office reported that the budget deficit will jump by $246 billion to $407 billion (actually a little bit less than predicted). Last year, the budget deficit was $161 billion.
More government debt. *sigh* Kids, I’m sorry.
I don’t think thats a fixed number, 200billion
but more of a guestimate number that could get even larger or smaller in the future. But what we did do is gurarantee some debt to the FHA and FNMA bond holders. So I say your welcome to all bond holders forign and domestic.
Also not all real estate markets are falling-just the bad ones. Affordability is key to the housing market – for all who bought more than they could afford, and the loose lenders, I say thank you for the mess.
What about the former execs of these firms who walked away with a bundle of money. Is this another corporate welfare scheme hidden behind here? Shouldn’t these executives be held accountable for making quick profits then running these companies into the ground. Then they walk off with tons of money and we the taxpayers pay.
Don’t forget the millions that will be paid out to the CEO’s for running the companies into the ground.
http://www.latimes.com/business/la-fi-fannie9-2008sep09,0,4063126.story
CEO Employment Plan
1. Become CEO of Fannie or Freddie
2. ????? *
3. Earn millions of dollars.
* note: actions performed in step 2 are irrelevant to achieving step 3.
Approximately $200 billion more debt in one year. How does the government stay afloat? If we ran our households with a net debt each year, the sheriff would end up selling our house! Someone needs to get elected that will fire all these idiots in Washington that have no fiscal responsibility, because eventually that debt will come down to each of us taxpayers and we will be expected to pay for ALL the failed bureaucracy!