When the facts change, I change my mind. What do you do? -- John Maynard Keynes

Wednesday, April 10, 2013

Fannie Mae and Freddie Mac - deja vu all over again

With apologies to Yogi Berra--one bubble after another--the result of official US policy, from Congress to the US Treasury to the Federal Reserve (the official "bubble machine") which induces and incentivizes bubbles in the real estate industry and related financial sectors--

Fannie Mae and Freddie Mac Turn Record Profits | New Republic: "Fannie Mae and Freddie Mac now serve this securitization function by themselves. Before the crisis, they securitized around 35 to 40 percent of all residential mortgages. Now that number has risen into the high 60s. Add in Ginnie Mae, a government entity which securitizes mortgages insured by the Federal Housing Administration, the Veterans Administration and the Farmers Home Administration, and roughly 90 percent of all home loans pass through a government backstop at some point in the chain. This is dangerous, especially if the economy ever dips back into recession, leading to a wave of mortgage defaults. As Fannie and Freddie guarantee the loans they securitize, this would put the taxpayer on the hook for hundreds of billions of dollars in losses—a replay of the 2008 crisis and bailout."

When will we ever learn?


The Big Picture

Financial Crisis - The Telegraph

JohnTheCrowd.com | The Sailing Website

Craig Newmark - craigconnects