Fannie, Freddie to be seized

[Aeson]

Bunning

Bunning accused Paulson of deception when he told Congress in July that the Treasury's plan would instill such confidence among investors that it would never have to be used.

Deception or ignorance... either way Paulson should be out.

[DaShi]

I think the Chinese approach is acceptable, at least as a short-term solution until the economy recovers and proper laws can be put in place that won't allow fraud to destroy creditors. If industry after industry collapses while the government stands idly by we could be looking at another Great Depression, until the government intervenes, as is its duty.

[PLATO]

Getting Paulson out now would be like shutting the barn door after the horse is gone. Pulling the conservatorship now would crash the financial markets. What is done is done. Paulson needs to be forced by Congress to come up with a plan that will detail the re-privatization of Fannie and Freddie. What form they will emerge in is an open question with a lot of satisfactory answers, but they need to emerge from under the federal umbrella at some point. My guess is that Paulson is gone in January with the new administration anyway. This is now his mess and he needs to let us know, specifically, how he plans on dealing with it. For now, there is no longer an alternative to gov't control for the time being. "For now" being the key phrase.

[Timexwatch]

Originally posted by DanS
Rock on, Bunning.

Bunning is also practically senile. I wouldn't run around touting his support.....

[Dinner]

`No company fails in communist China, because they're all partly owned by the government,'' said the former pitcher for the Philadelphia Phillies.


I don't think he knows what he's talking about.

[DanS]

Originally posted by Timexwatch
Bunning is also practically senile. I wouldn't run around touting his support.....

Much of what he says is true.

[DaShi]

Timexwatch

[Colon™]

Seems a bit easy to blame Paulson and his plan for the intervention. Refusing to step in would have crashed the USD.

[OneFootInTheGrave]

exactly - you cannot continue to ignore the structural problem(s) and hope they just go away on their own... teh commie approach seems to be doing just fine of short term stabilization of the markets world wide...

the question remains how to solve the problem long term, but at least now the government is directly responsible and this was really the last step they could take to ease the situation...

ultimately this is just a consequence of unregulated "freedom" fraud for various beneficiaries while the times are good, and all taxpayers "together" paying off the bills once the house comes crashing down... the good point being is that it seems that the taxpayers should be able to pay it off to avoid "Argentina world wide" scenario but that is more a political issue and the way US society is run/political will wasted, like Bush said (on another issue but this is a principle that works so well in US) "We had an accountability moment, and that’s called the 2004 elections" so it is no more than the paycheck coming back to the very people who like it loose...

[Dinner]

Lack of proper regulatory oversight was a huge part of creating this problem. Don't expect the general American public to think to hard about that fact though. They seldom think much about anything other then fluff (religion, abortion, moose hunting, etc...)

[Dinner]

http://www.npr.org/templates/story/story.php?storyId=94424809

That's a pretty good article by NPR on what would happen to the world economy if Freddie and Fannie went under. Finance Ministers from country after country all said if the two companies defaulted on their $5.5 trillion in debt it would be the single largest default (including government defaults) in world history. Supposedly the effect would be greater then if the UK or Japan were to default on their national debts.

[rmsharpe]

This is starting to remind me of the old Soviet Union; look at the people at the top getting the golden parachutes while the stockholders get golden showers... this isn't the free market, this is collectivism.

[Dinner]

Listen to the NPR link above your post. You might learn something.

[Colon™]

Originally posted by rmsharpe
This is starting to remind me of the old Soviet Union; look at the people at the top getting the golden parachutes while the stockholders get golden showers... this isn't the free market, this is collectivism.

And there was no socialism going on before? A study by the CBO in 2001 estimated the GSE's received a $65 billion subsidy in a 6-years period (95-00) due to the implicit guarantee and tax- and regulatory exemptions. And this was before the housing boom was gaining full speed. That subsidy, when passing through the GSE's sticky hands, lowered mortgage rates by about 0.25%.

http://www.cbo.gov/doc.cfm?index=2841&type=0&sequence=1

According to the last Flow of Funds report by the Fed, foreign investors owned $1.5 trillion in GSE debt and MBS. These were bough under the assumption that there was an implicit guarantee (or at least priced accordingly). Let the companies fail and the credibility of the US as a debtor would have been shred to pieces.

http://www.federalreserve.gov/releases/z1/Current/

Paulson had a gun placed to his head and rather than turn him into a scapegoat, Americans should realise you can't have your cake and eat it too.

[Zkribbler]

Originally posted by Oerdin
Lack of proper regulatory oversight was a huge part of creating this problem.

Bah! Any correct-thinking American knows that corporations can do no wrong. Their motive for profits must inevitably lead them onto the path of truth, righteousness, and universal blessings.