Fannie Mae and Freddie Mac, the mortgage finance giants that fund half the U.S. housing market, are about to become subsidiaries of the U.S. government.
The Treasury Department late Friday was putting together final details of a plan to take the two into conservatorship, effectively a government takeover, at a potential cost of tens of billions to taxpayers.
Any announcement would come just weeks before the two companies have to refinance $225 billion of mostly short-term notes. Fannie and Freddie sell debt to investors regularly, but concern about their financial position threatens to scare away those needed buyers, many of them foreign banks. A solid federal guarantee would allay investor fears and allow Fannie and Freddie to continue to raise funds as needed.
Earlier this summer, Congress gave the Treasury the authority to buy $25 billion worth of Fannie and Freddie shares if they falter. That was part of a much broader, and expensive, plan to shore up the housing market. Congress also earmarked $300 billion to refinance troubled mortgages and created a new regulator for Fannie and Freddie, which together control $5 trillion of mortgages, roughly half of the U.S. housing market.
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Alright..... half of the American people get to pay off the debt the other half couldn't pay on.
We get to pay off the all the bad loans the greed of the mortgage industry said were ok take loan out on...we get to pay for failed business decisions made by others who walked away with billions.
Sweet....I should just file for bankruptcy now.
Why would I want to be part owner of the worst failing business in American History?...oh yeah because the government says I HAVE TO....
Did I miss a meeting or something?
I guess we could just print more money and devalue everyone's dollar in order to pay it off...nah we do that now and it isn't working.
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Wait it gets better:
WASHINGTON — An important account in the federal Highway Trust Fund will run out of money this month, a situation that could hamper completion of road and bridge construction projects across the country, Transportation Secretary Mary E. Peters said on Friday.
Because the trust fund’s highway account is draining away, the Transportation Department will have to delay payments for projects, Ms. Peters said at a news conference. Since money from Washington typically pays 80 to 90 percent of the cost of federally aided road work, states with shaky finances may have to consider curtailing projects.
The fund is financed by federal excise taxes on motor fuel, 18.4 cents a gallon on gasoline and 24.4 cents a gallon on diesel. But the fund’s highway account is being rapidly depleted because for months Americans have been reacting to the high price of gasoline by driving less, Ms. Peters said. In May, for instance, vehicle-miles were down 3.7 percent from a year earlier.
State transportation officials expressed alarm. The money shortage will have “grave repercussions for the states, for hundreds of thousands of workers in the construction industry and the driving public,” said John Horsley, executive director of the American Association of State Highway and Transportation Officials.
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Don't worry though...we are going to bail this out too with our imaginary money.
To address the shortfall, the House this summer voted to transfer money from the government's general fund to bail out the highway account.
The White House threatened to veto that measure as a "dangerous precedent" that would shift the costs for road projects from highway users to taxpayers at large.
But in a turnabout, Transportation Secretary Mary Peters called on lawmakers Friday to complete work on legislation to transfer the money and prevent the fund from going into the red, jeopardizing transportation projects nationwide.
"At current spending rates, we will start the new fiscal year on October 1 with a zero balance in the Trust Fund, and will continue to spend more than we take in," Peters said.
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I can't believe how badly this country is being run...and we pay for it...and pay and pay and pay.
Welcome To Detroit
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