Fannie Mae Ugly

[moh malekpour]

http://online.wsj.com/article/SB121581762615347451.html?mod=todays_us_opinion

Investors continued to flee Fannie Mae and Freddie Mac yesterday, almost as frantically as the political class tried to reassure everybody there was nothing to worry about. Allow us to sort the good (there isn't much) from the ugly.

In the good category, Treasury Secretary Hank Paulson swatted back reports of a government "nationalization" of the companies – which would mean making explicit what has long been an implicit taxpayer guarantee of their liabilities. This would instantly add $5 trillion in liabilities to the federal balance sheet, doubling the U.S. public debt burden and putting America's AAA credit rating at risk. This is the nightmare scenario for taxpayers.

 

[Randolph Kinney]

Without fresh capital, lending is reduced. Big drag on housing.