Get RSS FeedFannie/Freddie Crisis Threatens Construction Spending Forecast
Abstract:
Mortgage giants Freddie Mac and Fannie Mae, who hold more than 70% of the mortgages in the country, may be technically insolvent and have experienced a nearly 50% plunge in the share price in the last week. Their debt is on the same order as the national public debt so their failure would be a disaster for the housing market with the inevitable spillover to the rest of construction and the broader economy. This will be a busy weekend for financial regulators in Washington.
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Comments
07/14/2008 - posted by GT
Well put Jim. That is great analysis!
The uncontained failure of Fannie and Freddie would mean the effective end of home mortgage market and would do lots of harm to the global financial system.
A Conservatorship would keep Fannie and Freddie’s debt off the government books. If Fannie and Freddie had owed only 5 million instead of 5 trillion, they would have been allowed to fail just like Indymac. I just hope the Fed has a large enough broom to help sweep up this mess!
