« A stopper of traffic | Main | The TALF trough »

Fanny & Freddie

By Owen Paine on Saturday February 21, 2009 08:51 AM

The kissin' cousins, Fanny and Freddie, got something too out of Obie's "keep our mortgages flying" program. Ask the Washpost, they'll tell ya:

"The federal government yesterday doubled its commitment to Fannie Mae and Freddie Mac, promising to reimburse the companies for up to $400 billion in losses on their investments in mortgage loans. "
Losses between the two are now running at about $130 billion per year, so at that rate the pair's now got a 3 year kitty.

It's on the loan portfolio front, however where you get to see clearly "feeble is as feeble does." Though Obie has authorized a new higher limit on mortgages the two can "buy", the total is way way way too low. The buy limit oughta be -- well, unlimited.

No problem here. The master plan already calls for "The Treasury -- to buy securities created by the two companies, easing the pressure to find private investors."

And we all know the Treasury has no credit limit. So why not swing for the fences here? In plain fact, these two chubby chillin' of our dear uncle Sammy could buy up all the residential mortgages in America, all 10 trillions worth, and we'd each of us citizen taxpayers be the better off for it.

More on this in a future post.

Comments (2)


China has sizeable holdings of Fannie and Freddie, and that is one reason why we are throwing so much money at them to keep them afloat. China is also using its leverage as major creditor to get concessions on "security matters" (i.e. Taiwan) in future discussions.

But isn't the mortgage subsidy a rather deep part of our overall crisis? Why not erase the system altogether, in favor of housing subsidies for all and a serious public-led, transit-friendly/car-obviating building boom?

Fuck mortgage holders. Let 'em eat their private speculations and salve their wounds with the same $500/month allowance as everybody else.

Post a comment

Note also that comments with three or more links may be held for "moderation" -- a strange term to apply to the ghost in this blog's machine. Seems to be a hard-coded limitation of the blog software, unfortunately.


This page contains a single entry from the blog posted on Saturday February 21, 2009 08:51 AM.

The previous post in this blog was A stopper of traffic.

The next post in this blog is The TALF trough.

Many more can be found on the main index page or by looking through the archives.

Creative Commons License

This weblog is licensed under a Creative Commons License.
Powered by
Movable Type 3.31