freddie mac
Fannie, Freddie and George
From The Times' Floyd Norris on the Bush administration's takeover of Fannie Mae and Freddie Mac:
Who could have forecast that it would be under the Bush administration, which talked about restraining the growth of these behemoths, that they came to totally dominate the mortgage markets? Now the administration wants to have it both ways in that area as well. Fannie and Freddie are ordered to start shrinking — in 2010, after a new president will be in office. Until then, they are supposed to grow.
More on the takeover (and replacement of management) of the mortgage finance companies here.
History Happens
From The New York Times:
Lawmakers and experts described the legislation as a landmark shift in the government’s role in the housing market, extending a helping hand to both Wall Street and Main Street. They said it would rank in importance with the creation of the Home Owners’ Loan Corporation to prevent foreclosures in the 1930s as part of the New Deal, and legislation in 1989 responding to the savings and loan crisis.
From the Wall Street Journal:
The bill, which began seven months ago as a modest attempt to help struggling homeowners, will now likely touch a vast array of borrowers, lenders, and investors: from owners in Colorado facing foreclosure to community banks in California and investment banks on Wall Street. read more »
Krugman's Contrarianism: Take A Load Off Fannie
Paul Krugman in The New York Times this morning on Freddie Mac and Fannie Mae:
[T]he storm over these particular lenders is overblown. Fannie and Freddie probably will need a government rescue. But since it’s already clear that that rescue will take place, their problems won’t take down the economy.
Furthermore, while Fannie and Freddie are problematic institutions, they aren’t responsible for the mess we’re in.
Still:
... Fannie and Freddie can’t be allowed to fail. With the collapse of subprime lending, they’re now more central than ever to the housing market, and the economy as a whole.
