US rescues giant mortgage lenders-"The rescue of Fannie Mae and Freddie Mac is the biggest corporate rescue in history - and dwarfs the UK government's bail-out of Northern Rock last year....Together, the two firms own or guarantee about $5.3 trillion (£2.7 trillion) worth of home loans - more than half the outstanding mortgages in the US....That is about...twice the size of the UK economy...you cannot actually get a home loan from either firm.
But while they are invisible to the average borrower, the two firms are highly influential institutions and are key to the US housing market.
As one US Treasury official puts it, the two firms are "way too intertwined with everyone in the world" to fail. Banks around the world are highly exposed to the two companies....The guarantees given by the US government were no longer enough...Almost all US mortgage lenders, from huge financial institutions such as Citigroup to small, local banks, rely on Fannie Mae and Freddie Mac, looking to them for the funds they need to meet consumer demand for mortgages....IndyMac had been struggling to raise funds and stay in business in one of the states worst hit by the US housing market slump.
Without similar close links to government it could not weather the storm, and went into administration."
Clicking on the Q&A section of this article gives more details:
"Confidence in the two businesses, which are at the heart of the multi-trillion US housing market...They are both shareholder-owned companies mandated by the US Congress to provide funding to the housing market.
Fannie Mae is short for Federal National Mortgage Association, Freddie Mac short for Federal Home Loan Mortgage Corporation.....There is no direct UK equivalent to the two firms....What would happen if they failed?
This prospect is all but unthinkable as far as the nation's bankers, regulators and politicians are concerned."-Thus the significance of Fannie and Freddie. Why doesn't American Media explain this? Why do we have to go out to the UK to find valuable information like this?
Now what is dissappointing about the article probabily due to an articles necessary length is that it doesn't explain to much about how Fannie and Freddie got so big in the first place (they weren't this big at first and so what was the push to get so big, where did that push come from and were their dissenters and reasons given for dissenting while Fannie and Freddie were growing so big?) and who had regulatory oversight over these Government Sponsored Enterprises (was it truely the free market or Congress or maybe both?) and what makes these companies different then a real private sector company and what effect they had on the private sector when it came to lending practices if any at all and how much they had an influence on more specifically the sub-prime market if any at all? For more on possible answers to those questions see:
Oh and the last question is why doesn't Big Media report so much on Fannie and Freddie's role in this current economic crisis and have any detailed conversations about it? Could it be politics?
New York Times articles in 1999 and 2003 on the Economy
New York Times not telling you the whole story once again
Media is not giving you the whole Mortgage Crisis story: Fannie and Freddie is Enron x 19/Microsoft Sized Monopoly/Leading Compaign Giver and LobbyistThe Economy and what Big Media is not telling you...
Obama's connection with Fannie Mae and Freddie Mac ignored in Big Media. The Fact that Bush tried to reform Freddie and Fannie ignored in Big Media.
Mortgage Crisis
Orson Scott Card (Democrat who is also, highly critical of the free-market and capitalism) writes a powerful argument and telling piece!!! Must read!!
$4.6 of the $6.6 trillion mortgage-backed securities at the heart of the financial crisis are from Government Sponsored Enterprises!!!!
Dow has gained 1400 points since 11/21/2008 after dropping 2000 points from 11/4/2008 to 11/20/2008 inspite of recession and unemployment news...
New York Times refutes itself when blaming Bush for the economic crisis. Fannie and Freddie leveraged their government-sponsored advantages...
