Federal Government to Sieze Freddie Mac and Fannie Mae

by James & Miel on September 5, 2008 · 0 comments

Folks, this is hot off the press, the NY times is reporting that the Federal government will seize control of mortgage giants Freddie Mac and Fannie Mae (here).

This is big news and its BAD.

This means that these institutions, whose role is regulate and provide a market for mortgage loans have FAILED. The Federal government will now have to assume the debt for these companies. This means the taxpayers will be on the hook for potentially tens – if not hundreds of billions of dollars worth of bad mortgages. The worst case scenario is that this will cause the Federal governments credit rating to decline, ultimate resulting in tax increases.

The reason this was released at 10:00pm on Friday is because its bad, very bad news.

Best,

James

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