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U.S. Seizes Mortgage Giants
JAMES R. HAGERTY, RUTH SIMON and DAMIAN PALETTA
Wall St Journal
Monday, Sept 8, 2008
In its most dramatic market intervention in years, the U.S. government seized two of the nation’s largest financial companies, taking direct responsibility for firms that provide funding for around three-quarters of new home mortgages.
Treasury Secretary Henry Paulson announced plans Sunday to take control of troubled mortgage giants Fannie Mae and Freddie Mac and replace the companies’ chief executives. The Treasury will acquire $1 billion of preferred shares in each company without providing immediate cash, and has pledged to provide as much as $200 billion to the companies as they cope with heavy losses on mortgage defaults. The Treasury’s plan puts the two companies under a conservatorship, giving management control to their regulator, the Federal Housing Finance Agency, or FHFA.
With that, the U.S. mortgage crisis entered a new and uncharted phase, potentially saddling American taxpayers with billions of dollars in losses from home loans made by the private sector. Bush administration officials argued that the cost of doing nothing would be far greater because of the toll on the economy of falling home prices and defaults in the $11 trillion U.S. mortgage market.
(Article continues below)
Mr. Paulson noted that more than $5 trillion of debt and mortgage-backed securities issued by Fannie and Freddie is owned by central banks and other investors world-wide. “Failure of either of them would cause great turmoil in our financial markets here at home and around the globe,” Mr. Paulson said.
By taking this action, the government has seized control of the vast bulk of the secondary market for home mortgages and will have a more direct responsibility than ever for solving the housing crisis. The intervention also marks the failure of the public-private experiment that was created to boost home ownership among Americans. Fannie and Freddie were created by Congress to help prop up the housing market, and investors have long believed the government would bail the companies out in a crisis. But the companies have long been owned by private shareholders seeking to maximize profits.
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9 Responses to “U.S. Seizes Mortgage Giants”
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September 8th, 2008 at 3:36 pm
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September 8th, 2008 at 3:37 pm
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September 8th, 2008 at 3:37 pm
Info-Warriors! UNITE! My community has started a website/channel, which has a monopoly on the infowar.
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Check us out at – http://www.dprogram.net and on MIRC #deprogram efnet.org or join the chat through browser @http://www.indytruth.org/deprogram.html http://WWW.DPROGRAM.NET DEPROGRAM YOUR MIND! ‘Countering Propaganda’
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September 8th, 2008 at 3:38 pm
Info-Warriors! UNITE! My community has started a website/channel, which has a monopoly on the infowar.
Our site contains: a top infowar video list; top patriots; toparticles for 2008; most viewed news items today section; centralcolumn with updated news daily. The site is one of the best on the net
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123
September 8th, 2008 at 5:55 pm
good news for us young people, now the lazy baby boomers will have to find a new way to get money. not going to be from the stock market… or from my labor. lol fuckin idiots
September 8th, 2008 at 6:30 pm
CARLYLE GROUP IS TAKING OVER FREDDIE MAC!!!!!!
QUOTE:
“David Moffett, who served as vice chairman and chief financial officer of U.S. Bancorp until early 2007 and then joined the Carlyle Group private-equity firm as a senior adviser, will take over Freddie Mac”.
“source: CNN Money.com Sept 7the
THE MADNESS NEVER ENDS WITH THESE PEOPLE!!!!DAMN THEM ALL….
September 9th, 2008 at 2:35 am
This is not a bailout of Fannie and Freddie. Just like Paulson (the idiot) said in the last paragraph, this is a bailout of the Mortgage backed securities that are ISSUED by Fannie and Freddie.
In other words, YOUR TAX dollars are coming out of your pocket to give to INTERNATIONAL investors. People who hold these MBS’s are from all over the world.
The US taxpayers are bailing out the billionaires NOT just of the US, but of the WORLD.
Next time you have a nice long workday, just remember that a nice chunk of your money is going to a failed Dutch investor, who is very thankful to you for allowing him to continue making his payments on his lavish beach-front villa.
Dank u voor het opkopen van me Amerikanen!!!
September 9th, 2008 at 2:48 am
Mark, your right.
But you have to understand that for the last 35 years the whole system has been a system of LOOTING.
Some people work and/or build things. Other people move paper around and get paid billions for doing nothing but being good at “the game”.
Now that the casino is bankrupt times 1,000,000 they don’t know what to do, so they decide they will just FLAT OUT take our money at this point.
It was CLEVER before and hidden. But now that they are desperate, they are simply TAKING our money.
But who cares? Paulson is smart. Why else would they have made him Treasury Secretary?
He’ll know what to do…
Oh wait, never mind. Paulson is an idiot. And Bernanke would walk off a cliff if his economics textbook told him to do so.
September 9th, 2008 at 12:38 pm
to all you mindless idiots who turnred in their gold back in 34. you should have given them lead! thanks for destoying america – stupid asses.