To the Editor:<\/p>\n
The day before the Underwear Bomber pulled up his loaded drawers, the Treasury set off its own bomb. The media covered the Fannie Mae\/Freddie Mac story on Christmas Day, but only those in the financial community paid much attention. Perhaps there was too much distraction.<\/p>\n
U.S. Treasury Ends Cap on Fannie, Freddie Lifeline for 3 Years<\/strong><\/a><\/p>\n
Dec. 25 (Bloomberg) — The U.S. Treasury Department will remove the caps on aid to Fannie Mae<\/a> and Freddie Mac<\/a> for the next three years, to allay investor concerns that the companies will exhaust the available government assistance.<\/p>\n
The two companies, the largest sources of mortgage financing in the U.S., are currently under government conservatorship and have caps of $200 billion each on backstop capital from the Treasury. Under the new agreement announced today, these limits can rise as needed to cover net worth losses through 2012.<\/p>\n
Fannie Changes Clear Way for \u2018Large-Scale\u2019 Buyouts<\/a><\/strong><\/p>\n
Dec. 28 (Bloomberg) — The U.S. government\u2019s expanded capital backstops and portfolio limits for Fannie Mae<\/a> and Freddie Mac<\/a> increase \u201cthe prospect of large-scale\u201d purchases by the companies of delinquent mortgages out of the securities they guarantee, according to Credit Suisse Group analysts.<\/p>\n
— Bloomberg News<\/p><\/blockquote>\n
Taking this action before the close of the year allows the Treasury Department to get around Congress. Next year, it would have been required to request any new funds from Congress. With these new caps they can absorb big losses.\u00a0It will allow F\/F \u00a0to start buying back the worst loans from bond pools, so they take the hit, rather than investors.\u00a0Then the pools trade up, to lower interest rates, keeping mortgage rates down in an attempt to re-inflate the bubble.\u00a0(It won\u2019t work) F\/F will buy toxic loans at higher than value prices and pass the bill to the taxpayers.<\/p>\n
It does beg the question, whose balls got burned the most?<\/p>\n
— Kelly Cowan<\/p>\n","protected":false},"excerpt":{"rendered":"
To the Editor: The day before the Underwear Bomber pulled up his loaded drawers, the Treasury set off its own bomb. The media covered the Fannie Mae\/Freddie Mac story on Christmas Day, but only those in the financial community paid much attention. Perhaps there was too much distraction. U.S. Treasury Ends Cap on Fannie, Freddie … Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"generate_page_header":""},"categories":[1],"tags":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/posts\/20945"}],"collection":[{"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/comments?post=20945"}],"version-history":[{"count":0,"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/posts\/20945\/revisions"}],"wp:attachment":[{"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/media?parent=20945"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/categories?post=20945"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/tags?post=20945"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}