Over the past 18 months there have been an endless amount of federal programs initiated by the Obama Administration. This all comes as a vast effort to stop or stave off further damages to a housing market that is still struggling. Politicians from both sides of the aisle are spearheading several new initiatives that are aimed at reforming what some call the center point for much of the woes within the housing market; Fannie Mae and Freddie Mac.
There has been plenty of media coverage on both of these market giants. The fact that these two companies became to large to fail caused the government to react and take conservatorship over both these companies in efforts to prevent a total collapse in the mortgage bond community.
Recently Sen. John McCain, Richard Shelby and Judd Gregg revealed a plan to address the reform of Fannie and Freddie. The maneuver was more a political call for action by Republicans to Democrats than a complete amendment. The Republicans want to see how serious house democrats are when it comes to dealing with the companies. The burden that has been placed on the American taxpayer to hold up these companies is unfathomable.
The salvation of Freddie and Fannie has come at a heavy price for the public. Most recent accounts have the running tab for these companies listed at $126.9 billion and counting. In the first quarter alone Freddie lost $8 billion, and requested an additional $10.6 billion from the government to offset these losses. Additionally they planted the seed saying that they are going to need further financial assistance in the near future. It is estimated that by the year 2020 the financial rescue line that the government threw these companies will total $380 billion tax payer dollars. It is going to take not only reform, but a realistic plan supported by both parties to end the government’s conservatorship role before tax payers will no longer be held hostage by these two financial giants.
image credit: Jason Reed – http://www.msnbc.msn.com/id/26859850/
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I sure hope that they draw more than just heat from both sides, but that they actually draw some sort of reprimand from somewhere. These big companies are creating quite a mess for the rest of us.
Its the problem with corporations who cant really hold anyone accountable like you can an individual, they just come out with the line I was just trying to do my best for the company.
If the road we are on continues they are estimating $380 billion in tax payer dollars by 2020. I’m sure they will put a lid on this before that though, right…
It seems to me that no company should get so big that the government has to cater to them. This is corporate gone bad and makes all of us suffer for CEO’s who don’t care about the people, but only the bottom line.
Perhaps the laws should be changed to make the CEO take responsibility for their actions. Its not right a CEO can run a company in the ground and walk away rich.
This is definitely a big problem to all of us, these companies can grow so big that at some point they start losing control.
I’m a big believer that government intervention normally does more harm than good. Case in point the tax credit (it was a very temporary fix). Anyway, back on topic, Fannie and Freddie have proven that they are not only ineffective, but they also lack enough vision/foresight to act without further supervision from ‘big brother’. Grr.
Whenever Fannie and Freddie get some type of oversight will be a benefit to the taxpayers. How much money do we need to pour down the hole?
Ed Haldeman on Freddie is going to fix it up and also create a good profit for Obama. He need just time.
It seems my posts are being spammed again just double checking
@Spanish Hot Properties – You can’t change the url when you leave a comment. I believe there is a correlation between your email address and the url that you use. So when you switch the url between comments it puts you in the spam box.
Hi Paul,
I didnt even know I have done that as I wouldnt want to change the URL
Sorry
Nick
Ya it was to costadelsollife. No worries I just don’t want your great comments getting caught up in the spam box. Cheers!