The U.S. government seized control of Fannie Mae and Freddie Mac after the biggest surge in mortgage defaults in at least three decades threatened to topple the companies making up almost half the U.S. home-loan market.
It is necessary to take action,'' Treasury Secretary Henry Paulson, who engineered the takeover along with Federal Housing Finance Agency Director James Lockhart, said in Washington today. ``Our economy and our markets will not recover until the bulk of this housing correction is behind us. Fannie Mae and Freddie Mac are critical to turning the corner.''
The Treasury will purchase up to $100 billion of senior-preferred stock in each company as needed to maintain a positive net worth.
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It probably won't REALLY be a problem for us until it reaches an imaginary number like a gijazillion dollars.
That $100 billion...yeah that's our money...they sure are loose with it aren't they?
When they buy the preferred stock, that goes to the people whom are executives or the main owners, NOT public stock like you or I buy...don't worry that public stock will continue to be as worthless as it is now....so in essence the government is buying out the people with $100 million that were the ones who put the U.S. economy in such jeopardy in the first place.
Nice reward system we have in this country, its good to have friends in high places.
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The circle jerk continues...
The New CEO's
Herbert Allison, 65, former chief executive officer of TIAA- Cref, will take over as Fannie's new CEO. David Moffett, 56, who was vice chairman of US Bancorp, will head Freddie, Lockhart said. They will work with existing management, he added.
Fannie CEO Daniel Mudd, 50, and Freddie CEO Richard Syron, 64, will serve in a transition period as consultants.
While common stockholders of Fannie and Freddie won't be eliminated under the conservatorships, they will be last in line for any claims, Paulson said. Preferred shareholders will be second in absorbing losses, he said.
Concern over the companies' capital pushed their borrowing costs to record levels over U.S. Treasuries, sent their common and preferred stocks tumbling and boosted mortgage rates. Fannie is down about 66 percent in New York Stock Exchange trading since the end of June. Freddie has fallen about 69 percent.
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I say let the mortgage companies fail.
The only people it will really hurt are those ultra rich preferred stock holders, you and I can get our debt wiped free on our mortgages....whats the problem?
Publish the faces of those responsible in the news as those responsible but DON'T give them $100 billion of my money as punishment....that's just plain idiotic.
Oh wait...I keep forgetting they have friends in high places.
Welcome To Detroit
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