Obama Says Freddie, Fannie Too Large for U.S. to Let Them Fail

Source: Yahoo News / Bloomberg



Sept. 6 (Bloomberg) -- Democratic presidential candidate Barack Obama said a federal takeover of Freddie Mac and Fannie Mae is probably necessary, though steps must be taken to ensure the mortgage giants don't keep passing losses off to taxpayers.
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``It looks like the Bush administration is going to intervene with a bailout that could end up costing taxpayers billions of dollars,'' Obama said today while campaigning in Terre Haute, Indiana. ``These entities are so big and they are so tied into the housing market that it's probably true that we have to take steps to make sure that they don't just collapse.''

Treasury Secretary Henry Paulson is preparing to announce plans to bring Fannie Mae and Freddie Mac under government control, seeking to halt the crisis of confidence in the companies that make up almost half the U.S. mortgage market.

Obama has said he supports a move by Congress to give the Bush administration authority to inject capital into the two government-sponsored mortgage-finance companies. Arizona Senator John McCain, the Republican presidential nominee, also has decried using taxpayer funds to shore up Fannie Mae and Freddie Mac, though, like Obama, says they can't be allowed to fail.

McCain, 72, has said he wouldn't allow ``dogma to override common sense,'' referring to bank rescues.

McCain's running mate, Alaska Governor Sarah Palin, said in Colorado Springs today that Fannie and Freddie ``have gotten too big and too expensive to the taxpayers.'' McCain, she said, ``will make them smaller and smarter and more effective for homeowners who need help.''

Bailout

Read more: http://news.yahoo.com/s/bloomberg/20080906/pl_bloomberg/a_5llfesxdas

it's simply too large -- period.

all corporate monopolies.

Proves the wisdom of the old adage "Don't put all your eggs in one basket".

You end up with an oligopolistic or monopolistic economy where the failure of one company can literally collapse the market and ripple to other sectors of the economy.

Good point, nichomachus.

then no human citizen should be too small to fail.

until the system cracks open.

How much longer can we put off the inevitable?

go read any investment message board. You will find tons of posts saying this is just a delay.... there is no stopping it now we are in for a major economic failure.

All bailout plans so far are geared toward making sure investors in Fannie/Freddie don't lose their shirts.

and with the election so close i'm not going out on the street naysaying obama. but personally i wouldn't give gwbush the authority to hold a door open for me. now or ever.

The Highway Trust fund is just about broke. This is due to a combination of higher raw material costs and more importantly declining revenue. The Trust Fund is funded by the federal gasoline tax per gallon of fuel sold. Since we are consuming less gasoline now, there is less revenue.

Infrastructure repairs are a reasonable efficient and effective economic stimulus package. This action would also be an effective step at improving the day to day lives of people as the American physical infrastructure is getting old and creaky. However there is no money for that.

Yet there is money for the Fannie Mae and Freddie Mac Bailout. As Barry Ritholtz at the Big Picture notes, we have to have our priorities straight people!

I suspect this will be another hugely expensive and ultimately unsuccessful attempt to bailout our prior irresponsible profligacy. Ultimately, we pay for this through 1) the massive printing of more dollars; 2) some corresponding form of hyper inflation; and 3) the kindness of not strangers but our overseas overlords.

That's right -- we have no money for rebuilding our infrastructure, for any form of National Heath Care, for fixing/saving social security, but a bunch of rogue traders and Alan Greenspan, under the guise of "Deregulation" can leverage up and lose trillions, which you the taxpayer is on the hook for!

Free market my arse!
http://bigpicture.typepad.com/comments/2008/09/here-comes-the.html

Priorities people, priorities, we have to keep the rich and the wealthy worry free as it would distress their beautiful minds.
This post's content came from http://www.newshoggers.com/blog/2008/09/priorities-peop.html

Come on its this really the attitude to adopt at this period? I think Obama is spot on... Cautiously proceed with keeping these companies from going bankrupt but protect the taxpayer.

but the consumer economy and the rapacious 20th century capitalist system needs to give way to something resembling a sustainable lifestyle. The only way a change of that magnitude will occur is in the wake of systemic collapse - assuming the shock and awe authoritarians don't get there first.

if we let it collapse it`s going to be very difficult to stop a world wide depression.

...of the nineties when Dems were running things. Wait, I can't remember myself... What did Clinton do when Fannie and Freddie Mac and a bunch of banks were failing under his watch?

Surely there is a precedent for all these huge failures in our financial system under Bush and his Republicans. I mean there were the S&L failures under Bush's dad, but that was before Clinton and the Dems ran things. McCain even got in big corruption trouble over one of them when he was in the Keating Five. Now there are a bunch more taxpayer gouging failures under George W. Bush and his fellow Republicans. But in between the two Bushes? I'm drawing a blank on giant, disastrous financial system failures under Clinton and the Dems.

Weren't there any?

...Nope, just can't remember any. Nothing in Google either. Weird.

These GSEs are needed to support the housing market. Making them smaller means that they will buy less mortgages, and that will completely kill the U.S. housing market.

Any real change would be an improvement--like amputation stopping gangrene.

If you want to read two sides of the same coin,


Monday morning, when the government announces it's take over of Fannie May and Freddie Mac, it will mean the US taxpayer has agreed to bail out the Chinese banks to the tune of $350 billion. Aren't you happy to do you part ? :sarcasm:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x3937426

A high-ranking Chinese economist has put his nation's cards on the table in the global financial poker game by effectively telling the US to fix Freddie and Fannie … or else.
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x3937473

.com for financial information. All four of China's largest banks combined held $23.28 billion of debt in Fannie and Freddie at the end of June.

http://online.wsj.com/article/SB122037859304991457.html?mod=googlenews_wsj

And the total debt amount is in the trillions of dollars, a lot of it held by entities here in the USA.

got us into this. They really shouldn't bitch about paying higher taxes.

What a ridiculous concept. Let them declare bankruptcy like any other business.

I guess a Depression is worth principle is it?

or even delay it. The Depression was on when W stole office the first time.

The Great Depression would have gotten far worse had it not been for the New Deal.

World War II rescued the economy. And then technology extended the boom for 20-30 years.

Government "intervention" is directly responsible for THIS economic disaster--or rather, the erosion of governmental regulation of the markets, the elimination of progressive taxation to prevent piles of frozen, rotting money accumulating in private vaults, the whole movement to eliminate estate taxes, the wars for vainglory or corporate conquest, the huge sale of public debt overseas and the total lack of fair interest rates for savers at home, the tax breaks for outsourcing and visas for skilled labor, all were designed to bring us to this point.

You can thank Phil Gramm, Ronald Reagan, and many others.

This is a capitalist system, is it not? Private profiteers who take enormous risks have to suffer their losses in bad times along with their rewards in good times.

It would be a double standard to make bankrupt citizens pay every last penny, yet to bail out Wall Street shareholders. That's ass backwards policy.

They say it's a 'market correction' and these things are just part of the 'free market' working.

Funny how these same people are the first to ask for a government bailout when it happens to their own entrerprises or investments.

You in theory can demand concessions like having the CEO leave and express strict rules for how the funds will be used.

DON'T LET THE CEO'S POCKET AND KEEP THEIR OVER $115,000/MONTH RETIREMENT FOR THE REST OF THEIR LIVES!!!

The "people" will be fine - they are insured up to $100,000 each - that's more than 90% of us have ANY savings at ALL!!!

If the "people" were too STUPID to put all their savings in ONE BANK - THEY DESERVE TO LOSE IT ALL!!!

WE'RE SICK AND TIRED OF PRIVITAZING THE PROFITS WHILE AT THE SAME TIME PUBLICIZING THE DAMAGES/RISKS!!!

An empty suit reading a script. But she recites it with such authority. :puke:

China Goes The Big Squeeze; Fix Freddie And Fannie … Or Else.

A high-ranking Chinese economist has put his nation's cards on the table in the global financial poker game by effectively telling the US to fix Freddie and Fannie … or else.

"A failure of US mortgage finance companies Fannie Mae and Freddie Mac could be a catastrophe for the global financial system", Yu Yongding, a former adviser to China's central bank, says.

"If the US government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic," Yu said in e-mailed answers to Bloomberg. "If it is not the end of the world, it is the end of the current international financial system."

MORE...

DU discussion thread: http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=3937473

Article source: http://business.smh.com.au/business/china-goes-the-big-squeeze-20080829-45q8.html

What's happened to any of our laws --- ???

IMO . . . !!