08 September 2008

Mortgage bail-out yields economic boost

The US Government took over the ailing mortgage lenders Fannie Mae and Freddie Mac in the largest bail-out in US history. The US taxpayers are footing the $200 billion capital injection that will keep the two giants solvent. While the move rewards reckless investing, it probably beats the potential alternative of a collapse that would lead to a major upheaval in the financial markets.

"[US Treasury Secretary Henry] Paulson said the government was intervening in the wider interests of the financial system and of taxpayers since the financial position of the two firms was fast deteriorating. "
No word on how they plan on instilling financial savvy and a basic understanding of mortgage rates in the common homeowner.

1 comment:

The.Bull.Moose. said...

yes, 200 billion dollars - a good half of which come from taxes. Know where they're going? 15 million dollar golden parachutes for the ejected executives, and the purchasers of the mortgage backed securities (psst a whole lot of which is China, don't tell anybody). Know who isn't getting anything? The investors who have come to know fannie and freddie as supposedly benevolent former governmental corporations to promote home ownership and oh yeah the roughly 9% percent of american homeowners who are behind on their mortgages set up via predatory lending.