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President Bush said Sunday that the historic federal government takeover of mortgage giants Fannie Mae and Freddie Mac is needed to keep them from failing, a risk he called "unacceptable" for an economy battered by housing and credit crises.
"Allowing the companies to fail or further deteriorate would damage our home mortgage market, and could weaken other credit markets that are unrelated directly to housing," Bush said in a statement released Sunday afternoon. "Americans should be confident that the actions taken today will strengthen our ability to weather the housing correction and are critical to returning the economy to stronger sustained growth."
The Bush administration announced Sunday it was taking control of the two institutions to avert the potential for major financial turmoil.
The companies, which together own or guarantee about $5 trillion in home loans, about half the nation's total, have lost $14 billion in the last year and are likely to pile up billions more in losses until the housing market begins to recover.
Both companies were placed into a government conservatorship that will be run by the Federal Housing Finance Agency, the new agency created by Congress this summer to regulate Fannie and Freddie. The executives and board of directors of both institutions are being replaced.
In a statement, the president called the moves temporary until the appropriate role for the companies can be determined.
He said they must be reformed so that "they not pose similar risks to our economy or the financial system again."
Treasury Secretary Henry Paulson said the actions were being taken because the failure of either of the mortgage companies "would cause great turmoil in our financial markets here at home and around the globe." The huge potential liabilities facing each company could cost taxpayers tens of billions of dollars. But Paulson stressed that the financial impacts if the two companies had been allowed to fail would be far more serious.
Bush said the federal regulator for Fannie Mae and Freddie Mac determined they could no longer operate safely and conduct their public mission.
He said that posed "an unacceptable risk to the broader financial system and our economy."
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 | US government takes on big role in mortgage market | Associated Press | Fri Sep 5 | 8 |
| Fannie, Freddie blind to the bubble | Associated Press | Sat Sep 6 | 0 |
| Mortgage rates drop after Fannie, Freddie takeover | Associated Press | Sun Sep 7 | 6 |
| Administration defends takeover of mortgage giants | Associated Press | Mon Sep 8 | 3 |
 | Housing market not out of the woods | Associated Press | Mon Sep 8 | 47 |
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{"commentId":2808808,"authorDomain":"maxhousewell"}
I wonder what the President's, CEO's and the rest of the deadwood at the top, pull down a year, plus bonus's.
{"commentId":2808808,"threadId":"351662","contentId":"1838675","authorDomain":"maxhousewell"}
- 3 votes
#1 - Sun Sep 7, 2008 4:49 PM EDT{"commentId":2809629,"authorDomain":"PamelaDrew"}
I wonder what the President's, CEO's and the rest of the deadwood at the top, pull down a year, plus bonus's.
It's not as much as the fund managers who package and securitize the debt. This was a free for all give away to banksters. While the President calls the collapse of the failing lenders unacceptable, what's seven worse is the Enron accounting that Washington gave their friendsters on Wall Street to make it happen in the first place.
{"commentId":2809629,"threadId":"351662","contentId":"1838675","authorDomain":"PamelaDrew"}
- 4 votes
{"commentId":2809077,"authorDomain":"blerten"}
This is perhaps the new pinnacle of what I call the government's 'damned if they do, damned if they don't, damned if they can't decide' situation.
No matter what, they'll get the heat. (And rightfully so! I hear some of you saying.)
It sounded to me like a no-win situation, which of course means it leaves the feds wide open to criticism from all corners.
I've said it before, I'll say it again - is this a great country... or what?
{"commentId":2809077,"threadId":"351662","contentId":"1838675","authorDomain":"blerten"}
- 1 vote
#2 - Sun Sep 7, 2008 5:17 PM EDT{"commentId":2809095,"authorDomain":"jlhughes"}
Too much. Just take a look at the board of directors and you will see some familar names. There is too much waste in Fannie and Freddie. They have great guidelines for mortgage lenders and should be followed. The problemis that there was too much opportunity for corruption. This is not a let's point fingers and blame a party. This is a problem of not for profit. You have people from different industry and from government, trying to tell them how to do business. This is part of the sub-prime mess. It stinks to high heaven.
It could hurt the economy more.
{"commentId":2809095,"threadId":"351662","contentId":"1838675","authorDomain":"jlhughes"}
- 4 votes
#3 - Sun Sep 7, 2008 5:20 PM EDT{"commentId":2809272,"authorDomain":"billlea"}
A few years back , when they made huge profits , they kept the money...
Now when they are loosing money the american taxpayer has to help out.
It's not over , soon they will say the big wall street banks lost money on
OTC Deriivitives . Jim Sinclair says the losses might be 45 Trillion +
I hope the Federal Reserve just lets them go out of business......
A loss like this could hurt the National Security of the USA...
{"commentId":2809272,"threadId":"351662","contentId":"1838675","authorDomain":"billlea"}
- 1 vote
#4 - Sun Sep 7, 2008 5:42 PM EDT{"commentId":2809335,"authorDomain":"lpwillham"}
The 'biggest' thing the government could do and probably wont, is to control the "release" of foreclosures on the market and the dollar amounts for which they are dumped on the market.
The massive dumping of property by Fannie and Freddie is killing the housing market and driving down equity of average americans who didnt use their homes as an ATM.
I looked at a property near me recently, that was mortgaged in 03 for 120,000.00 ( probably realistically worth 100K today) 'dumped' on the market at 12,500.00. It will likely be bought by an investor and turned into low income housing or will just "sit" anticipating a market turnaround.
The government needs to set a realistic market rate for these properties and stop the "dumping' for 10 cents on the dollar. They also need to have the mortgage company offer financing on those properties rather than strict cash sales. there are a lot of americans, currently renting, who could easily afford a 10-20K house but no mortgage company makes loans for less than 30K these days.
A common sense approach could result in a turnaround of the real estate market. Fannie and F1reddie made the mess , they should be part of fixing it.
{"commentId":2809335,"threadId":"351662","contentId":"1838675","authorDomain":"lpwillham"}
- 1 vote
#5 - Sun Sep 7, 2008 5:48 PM EDT{"commentId":2809361,"authorDomain":"newbroom"}
I guess the *markets* will be UP tomorrow.....who ARE these people?
{"commentId":2809361,"threadId":"351662","contentId":"1838675","authorDomain":"newbroom"}
- 1 vote
#6 - Sun Sep 7, 2008 5:51 PM EDT{"commentId":2810002,"authorDomain":"jlhughes"}
It's going to hurt the markets...we are going into October and that scares me. Historically this is the time the markets get real spooky. The annual reports are coming out. In the markets at this time of year you are going to see a lot of ups and downs. This is going to weaken the dollar.
Does anybody know how to grow their own food? We may be going their. This is a bad, bad move.
{"commentId":2810002,"threadId":"351662","contentId":"1838675","authorDomain":"jlhughes"}
{"commentId":2822599,"authorDomain":"newbroom"}
Investors around the world breathed a sigh of relief on Monday after the federal government took over and backed Fannie Mae and Freddie Mac, assuring a continued flow of credit through America's wounded mortgage system.
Shares of Fannie Mae and Freddie Mac, however, were both down more than 80 percent.
While central banks around the world have historically accounted for a quarter of purchases of Freddie Mac debt, their share rose to 37 percent for debt issued since 2006,
Dow- UP 285.00....
{"commentId":2822599,"threadId":"351662","contentId":"1838675","authorDomain":"newbroom"}
{"commentId":2809404,"authorDomain":"darthmaulrob"}
So basically they stepped in, bailed all of the crooks, rich people, and the dumbass who payed too much for the houses, causing the housing market to become inflated and subsequently me not to be able to afford to buy and house. Wow.. I wish they could step up and take care of some credit card debt to keep families from going under. Why hasn't that happened, or they could have taken Oil of the list of commodities able to be traded on speculation so we can our fuel prices under control... NOPE THEY WONT DO THAT! What a load of @!$%#! I don't know if anyone understands this but recession and depression are both cycles in the economy.. they help set things back into perspective, and when you take away the cycles then all the inflation stays inflated!! Hence higher salaries to compensate, then higher prices to compensate for our higher salaries, so guess what the rich get richer and we on the lower end still cant afford to buy a house.. The house that used to be 100K is now 400K and guess what, Mr. Bush sure hasn't given the military that big a pay raise! So everyone just buys the 400K 1500 sqft house when they make 50K because that is the only house that is available.. LET THEM FAIL AND LET THE MARKET AND ALL OTHERS THAT ARE INVOLVED TASTE WHAT ITS LIKE TO BE ON THE OTHER END.....This country used to be the best in the world..Europe is sure putting us to shame these days..WHY DO WE ALLOW THE GOVT. TO KEEP DOING THE THINGS THEY ARE DOING...We need to step up Americans.. Since looking at all these entries on various website.. AMERICANS didnt want the bail out! Everyone needs to write you congressional leader a protest..We should not reelect these individuals!! DO SOMETHING PEOPLE!!
{"commentId":2809404,"threadId":"351662","contentId":"1838675","authorDomain":"darthmaulrob"}
- 3 votes
#7 - Sun Sep 7, 2008 5:56 PM EDT{"commentId":2809545,"authorDomain":"downzy"}
Government deregulation of banking is causing this mess. Of course they have to bail out Freddie and Fannie but who is going to help out Everyman, I thought it was government of the people by the people not of the few for the few. The Dems want to help out the common folk and they call it socialist. What do you call it when the government only helps out the powerful- CORRUPTION!
{"commentId":2809545,"threadId":"351662","contentId":"1838675","authorDomain":"downzy"}
#8 - Sun Sep 7, 2008 6:13 PM EDT{"commentId":2809735,"authorDomain":"billlea"}
This is like the Iroq War... It starts out at 80 Billion then grows to 3 Trillion +
Bailing out Wall Street Banks and Freddie Mac can be 20 Billion now then more......
If they just print the money to solve it, then , the dollar is Dog Food .....
Gold and Silver is screaming at you all ........ buy Gold and Silver ....
{"commentId":2809735,"threadId":"351662","contentId":"1838675","authorDomain":"billlea"}
#9 - Sun Sep 7, 2008 6:32 PM EDT{"commentId":2811821,"authorDomain":"jlhughes"}
Stop blaming anyone. It is when the government steps in and makes an issue about housing. They start to mess with those who should not have had a chance at getting a house instead of letting the banks check their tax returns for two years and look at their bank statemtns like they did mine...Doesn't anyone see that this is where the tough banking policies need to be separate from the government telling them who and who should not have a home?
{"commentId":2811821,"threadId":"351662","contentId":"1838675","authorDomain":"jlhughes"}
{"commentId":2812580,"authorDomain":"darthmaulrob"}
Very true but the banks are alot to blame for the housing market inflation..If they cant sell the house once they have inflated the cost then they go out of business.. This is where they start their special 'deals' to the general public who would have been able to buy this house in their price range.. they same house is now 3x the amount and the same people have to buy it at this price or not buy a house... Well with the banks offering the swell 100 year mortgages and all these days... why not right?? Remember these FAMILIES, just want a place to live..It is the banks who have inflated the market and then the people having to buy at the price.. Not enough people can say no like I did... but now that the gov is bailing the banks out.. the natural economic cycle of recession and depression wont happen the way it is suppose to and the all our @!$%# will pretty much stay inflated.. except our salaries of course.. Hence the $4 gallon of gas that has never gone back down, the $4 gallon of milk, the $2 loaf of bread.. etc.. Do you remember hearing about when people had to roll wheelbarrels of cash around to buy stuff because they prices were so bad, well it has to get to that point and not get bailed out to recover.... Because eventually most people will just not afford to live! I am a single parent, serve my country in the military, deploy over seas, fight in all the dumb war, and guess what I cant afford to buy a damn house.. WTF !!!! Dont blame the little guy they are usually just trying to make it.... Keep that in mind.. Not alot of greed going on when you just want to have a house to live in.. But there is alot of greed going on when you have to 10x what it is supposed to be worth.. Let the banks fail and bring the housing market back to its knees so I can actually afford to buy a damn house!!!!
{"commentId":2812580,"threadId":"351662","contentId":"1838675","authorDomain":"darthmaulrob"}
- 2 votes
{"commentId":2809825,"authorDomain":"billlea"}
CNN and ABC and NBC and others are not telling the general public how bad this
Credit Crisis really is. these large wall street banks have huge OTC Derivitive
contracts going down and going down more.... The Banks won't talk about it.
the losses are around 45 Trillion Dollars .... much too big to bail out .....
It is clear that the Government is controlling the Press .... too bad...
get out of paper investments .....
{"commentId":2809825,"threadId":"351662","contentId":"1838675","authorDomain":"billlea"}
#10 - Sun Sep 7, 2008 6:40 PM EDT{"commentId":2810328,"authorDomain":"blerten"}
Maybe I should, as a reporter, change my user name to 'Dont Shoot the Messenger.'
I heard that very figure, well a bit higher (a $50 trillion hole), on CNN's 'In the Money' today.
The media can tell you everything you want to know. Whether enough people CARE is something out of their/our control.
{"commentId":2810328,"threadId":"351662","contentId":"1838675","authorDomain":"blerten"}
{"commentId":2811846,"authorDomain":"jlhughes"}
I will tell you that Merrill Lynch tried to sell off its sub prime division Home Loan services aka First Franklin and Nationpoint and could not get a buyer. They then decided since they couldn't sell HLS that they would service the loans from other companies. The loans are so bad that they cannot even get the loans to service. It looks like they might be closing the doors to HLS in about a month.
{"commentId":2811846,"threadId":"351662","contentId":"1838675","authorDomain":"jlhughes"}
{"commentId":2812609,"authorDomain":"darthmaulrob"}
Unfortunately I wasnt eligible for a 'bail-out' as a citizen, when I was coming home from war, getting divorced, loosing everything, but my kids who live with me.. and had a repo on my credit, and 20K+ worth of debt at the comfortable APR of 28%... Why again dont we qualify for the same things when things are tough on us?? If we want to help people make the credit lenders charge a damn resonable APR, instead of raping everyone..
{"commentId":2812609,"threadId":"351662","contentId":"1838675","authorDomain":"darthmaulrob"}
- 1 vote
{"commentId":2811045,"authorDomain":"cyan412000"}
People need to ask themselves, why are these bailouts always done on the weekends now? freddie fannie bearstearns. bank failures.
They always do this on the weekends now. done deal and no protests. they just go ahead and do it. so congress must have ok'd this move?
{"commentId":2811045,"threadId":"351662","contentId":"1838675","authorDomain":"cyan412000"}
#11 - Sun Sep 7, 2008 8:46 PM EDT{"commentId":2812217,"authorDomain":"blerten"}
Actually, Cyan, Congress did OK it, before their summer recess, in terms of giving the Fed or whomever the authority to proceed, once the plans were in place.
Lots of such decisions are made on weekends, to give the markets time to consider them and not rush to judgment. It's like the press releases with bad news that go out at 5:01 pm on a Friday, so the markets are shut and all the contacts are un-contactable. As a reporter, I've seen it for decades;-)
{"commentId":2812217,"threadId":"351662","contentId":"1838675","authorDomain":"blerten"}
{"commentId":2814801,"authorDomain":"cyan412000"}
i do not recall congress giving the stamp of approval to "take over" these 2 banks. i recall congress wanting hard numbers of the costs before they approved anything. this still hasnt been done.
{"commentId":2814801,"threadId":"351662","contentId":"1838675","authorDomain":"cyan412000"}
{"commentId":2816366,"authorDomain":"blerten"}
If that's true, cyan, why haven't we heard an outcry from Congress? Oh, wait... this is an election year... never mind;-/
{"commentId":2816366,"threadId":"351662","contentId":"1838675","authorDomain":"blerten"}
{"commentId":2819144,"authorDomain":"fidelg3"}
"I think that the surge has succeeded in ways that nobody anticipated," Obama said while refusing to retract his initial opposition to the surge. Mr. Obaminable should go back to flipping burgers, not flipping positions. I am sure he will soon flip on his stance on the Fannie Mae/Freddie Mac issue.
{"commentId":2819144,"threadId":"351662","contentId":"1838675","authorDomain":"fidelg3"}
#12 - Mon Sep 8, 2008 1:20 PM EDT{"canLink":false,"threadId":"351662","isPrivate":false}
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