Fannie & Freddie Heading for “Conservatorship”

This was originally posted Thursday evening 07-10-2008 at 10:33 PM, but since it obviously resonated with so many people, I am moving this to Friday morning. Some great comments, too.


Gee, that didn’t take long:

"Alarmed by the growing financial stress at the nation’s two largest mortgage finance companies, senior Bush administration officials are considering a plan to have the government take over one or both of the companies and place them in a conservatorship if their problems worsen, people briefed about the plan said on Thursday.

The companies, Fannie Mae and Freddie Mac, have been hit hard by the mortgage foreclosure crisis. Their shares are plummeting and their borrowing costs are rising as investors worry that the companies will suffer losses far larger than the $11 billion they have already lost in recent months. Now, as housing prices decline further and foreclosures grow, the markets are worried that Fannie and Freddie themselves may default on their debt.

Under a conservatorship, the shares of Fannie and Freddie would be worth little or nothing, and any losses on mortgages they own or guarantee — which could be staggering — would be paid by taxpayers.

The government officials said that the administration had also considered calling for legislation that would offer an explicit government guarantee on the $5 trillion of debt owned or guaranteed by the companies. But that is a far less attractive option, they said, because it would effectively double the size of the public debt."

Bloomberg adds:

"The government-chartered companies, which own or guarantee about half the $12 trillion of U.S. mortgages, can count on a federal lifeline, said Republican Senator John McCain, of Arizona, and Democratic Senator Charles Schumer, of New York.

The remarks by the presumptive Republican presidential candidate and the head of the congressional Joint Economic Committee followed a slide in the firms’ shares to the lowest level since 1991. They indicate Congress would push the administration to use government funds to prevent the companies from failing and threatening a deeper housing recession."

I smell an ugly, taxpayer-funded bailout coming — and I am utterly aghast at what its going to cost . . .



U.S. Considers Takeover of Two Mortgage Giants
NYT, July 11, 2008

Fannie, Freddie Are Too Big to Fail, Lawmakers Say
Dawn Kopecki
Bloomberg, July 10 2008

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What's been said:

Discussions found on the web:
  1. Hangtown commented on Jul 10

    Too big to fall.

  2. Andy Tabbo commented on Jul 10

    It was real warming to hear all the assurances on CNBC from the same ol’ talking heads….”these companies are too big to fail”….”they will not fail.” As if the fact they they will be bailed out makes everything “O.K.”

    There are no free lunches.

    What a massive bailout of Fannie and Freddie means is even larger Federal deficits and another run on the U.S. Dollar. Of course this will lead to the continued and anabated flight out of equities into hard commodities.

    Observe the last several months of price action to get a feel for the next several months of price action.

    These are the sort of developments that support the S&P 500 targets below 800 in the next few years.

    – AT

  3. Mike in NoLA commented on Jul 10

    Phil Gramm would just say that you’re a whiner.

  4. Steve Barry commented on Jul 10

    Gee…almost exactly as I spelled out here about an hour ago:

    I really wasn’t implying BK for F & F…the Government would likely step in before that. The companies would probably be nationalized and the shareholders will be for all intents and purposes wiped out. They probably won’t raise taxes to pay for this, just create some electronic entries somewhere that add to our debt and make it harder to attract the capital we need to keep the dollar a viable currency, which will make…oil rise (seems all roads lead to that).

  5. leftback commented on Jul 10

    Unbelievable… ugly, and yet inevitable.

    Having avoided mortgage debt, many renters and taxpayers are about to own small slices of millions of mortgages – now that is asset structuring and securitization distilled to its essence.

  6. TheGuru commented on Jul 10

    The fiscal recklessness of the banks and the government in this country will force those who do not agree with these measures to pursue and and all methods of investing assets outside of this country as the gevernment of this country has no regard for the taxpayer in any way, shape or form. I’m pissed.

  7. Chief Tomahawk commented on Jul 10

    Well. If this doesn’t qualify as ‘blood in the water’, what does? Now that word of this plan has leaked, how long before it’s put into being? What does gold do? Is the winner of the CNBC Portfolio Challenge determined in one day based on playing the currency market?

  8. Pat G. commented on Jul 10

    So, let’s see if I got this right. Big business runs themselves into debt with the help of our government. The debt is then transfered through legislation to what have always been two government agencies anyway until they become infected then our money becomes the cure. Why is it that the tax payers are always the one’s sacrificing?

  9. Steve Barry commented on Jul 10

    You guys seem so sour…just remember, this is the bill for arguably a 20 year debt fueled orgy, including stock, housing and commodity bubbles. Easy Al walked out on the bill.

  10. Joe Klein’s conscience commented on Jul 10

    The dollar is going to tank a lot more, oil will go to $200/barrel, if not more and gold will go to $1,500, if not more. The big question is, will the Chinese and Japanese buy any more debt? Things are going to get real fuggin’ ugly!!

  11. James commented on Jul 10

    I smell an ugly, taxpayer-funded bailout coming — and I am utterly aghast at what its going to cost . . .


    Aghast? I’m more like furious that we’ve been placed in this position in the first place. The financial debacle we’re experiencing almost daily isn’t the
    result of vicissitudes in the economy or market. It’s due to sheer
    ineptness – all preventable – that we will all end up paying dearly for.

  12. rexl commented on Jul 10

    and to think George Bush was worried about his legacy.

  13. Steve Barry commented on Jul 10


    It wasn’t all for nothing was it? Some of us will keep our McMansions, flat screen TVs and gas guzzling SUVs.

    To Summarize: This was all very predictable to those who bothered to read a chart of total credit as % of GDP.

  14. John F. commented on Jul 10

    On the bright side, the taxpayer won’t have to pay much for the equity after Bill Poole’s comments.

  15. CU commented on Jul 10

    So is it too late to short FNM into the ground? Puts maybe? Or is now the time just right time? I just don’t have any knowledge of “Conservatorships”.

  16. Olivier Giovannoni commented on Jul 10

    Oh c’mon Barry I’m used to better than that. You are aghast at the cost of the government saving Fannie an Freddie? Do you really think the alternative is better? Puh-leeeez.
    I’m not even surprised, I’m pleased.

  17. Bob A commented on Jul 10

    “and to think George Bush was worried about his legacy”

    You mean George Herbert Hoover Bush?

    Oh he’ll have a legacy.

    They’re gonna put his head on the new penny.

    The one made from wood.

  18. Ereshkigal commented on Jul 10

    Add this to the savings McCain promises from cutting taxes, and we’re going to have a HUGE surplus!

  19. Steve Barry commented on Jul 10

    Who will be the first idiot on CNBC to say Fannie and Freddie will see write-ups?

    My bet is on Dennis Kneale.

  20. adam commented on Jul 10

    How much of the $5 trillion is acutal bad debt, and how much will become bad debt? Will the government foreclose? What will be done with foreclosed properties.

    I think Paulson should get Bill Seidman on the line, stat, because he helped the US government turn a profit on the S&L crisis.

  21. larster commented on Jul 10

    If this is true, McCain should fold his tent, after castrating Phil Gramm, and putting his balls up for sale on EBay. So we have as party dedicated to small government taking on a $5-11 trillion obligation, while at the same time machoing up to a war with Iran that will raise the price of oil to $200 a barrel and cost another $50-100 billion a year. Unfortunately, even if the Dems were smart enough to figure a way out of this, there are no funds to get there. for someone who played the game the right way and saved enough for retirement, I feel like I was raped on this one.

  22. ron commented on Jul 10

    The bailout or takeover of the GSE’s by the gov’t will only create more problems and more problems, which has been the unfolding financial actions since last year. Many will welcome the gov’t takeover but the side effects beyond current view may prove to be worse than we can imagine. The USA as a world fiancial leader will have offically ended and the 21 trillion dollar SFH market exposed as a fraud. Not a good situation for a country dependent on foreign dollars to pay its daily debt.

  23. ndk commented on Jul 11

    Futures soaring on the news right now…

  24. Troy commented on Jul 11

    you b@stard ndk, you made me look ;)

  25. Alfred commented on Jul 11

    The problems with Fannie and Freddie are overblown. Pool’s technical insolvency call is probably related to the changes of FASB accounting rules (FASB 140) for the GSE’s. This accounting changes have caught investors off guard and big losses in Q2 are expected.

    There are still options available other than a government bail out to minimize the impact from these accounting changes. The excellent real estate blog HousingWire submits that FASB is quietly working on an option to avoid consolidating the GSE’s MBS in other words to seek exemption from FASB140 for the GSEs. HW sees ample precedent for regulators to soften the blow of accounting changes on regulatory capital requirements.

  26. ndk commented on Jul 11

    Dude, I only wish it were a joke. It’s trough time. S&P @ 1260.40, +5.90

  27. Steve J. commented on Jul 11

    Hey, relax! This is all mental. [/Phil Gramm]

  28. Jerome Jed commented on Jul 11

    google news “Conservatorship”. First story Fannie Mae, next 12 stories are about Britney Spears trying to get her kids back.

    This is how bad it has got!!!!!!!

    Jerome Jed

  29. Troy commented on Jul 11

    hm so it is. Teach me to hold SDS overnight I guess.

    I suppose it makes sense, the markets want less uncertainty, and the GSE thing has been a big unknown for a long time.

  30. ndk commented on Jul 11

    This resolves absolutely nothing, but I’d be an idiot not to devour my small piece of the carcass du jour.

  31. bluestatedon commented on Jul 11

    “They’re gonna put his head on the new penny.
    The one made from wood.”

    Nah, wood actually has some intrinsic value. The Bush penny will be 100% paper, made from shredded and recycled subprime mortgage documents.

  32. Phil commented on Jul 11

    Where are these guys(politicians)coming from thinking they can pass whatever legislation they want at the tax payer’s expense and businesses profit. Did they ever read the Constitution or study history? Aren’t we living throught the same conditions the founders of our country were when they started a revolution? ‘No taxastion without representation’. Sounds better than ‘Yes we can’ whatever that means. Sorry for venting on your site Barry but I can’t get over how socialistic our government has become. If we won the cold war, why are we acting more like them than they are?


  33. montaigne commented on Jul 11


    So am I supposed to buy a house now with rates still low or just wait for the amount of debt to shrink as rates jerk higher?

    WTH. Is it deflation or inflation?

  34. adam commented on Jul 11

    Just relax. The treasury has been solving financial crises since Alexander Hamilton’s “First Report on Public Credit” in 1790. Recall that he consolidated a mess of state and federal debt (Washington himself took a crack at this and failed). Hamilton’s efforts were highly controversial at the time (principally because Madison and Jefferson felt it was a federal power grab).

  35. Jerome Jed commented on Jul 11


    We are not socialist, we are fascist. There is a big difference. Socialists share profits, but let individuals take losses. Fascists share losses, but let individuals keep profits.

    Take off your glasses. Your ideology blinds you.

  36. ECONOMISTA NON GRATA commented on Jul 11

    It’s starting to feel like Zimbabwe around here. It’s a scary creepy kind of feeling…

    Putin is smiling and snickering at us, he’s thinking…. “You thought you were such hot shit you f–king morons, look at you now, cup in hand, begging for alms….”

    It’s all so undignified, Bear, Citi, LEH, GM, F, Fannie, Freddie, the Fed, Bush and Co, Iraq, Afghanistan, Katrina, Atty Gate, Housing, Gasoline, Food, etc. etc…. It makes me sick…. This is the path the so called ruling class American elite have led us down, it’s pathetic, it’s a joke that’s not funny.

    What happened to us…..? What the fuck were we thinking….?

    And to have heard that arrogant prick Phil Gramm today, that was really the icing on the cake.


    Best regards,


  37. Stuart commented on Jul 11

    Dollar, RIP!

  38. samsin commented on Jul 11

    The U.S. and the world was quite different in 1790 – as our economy and currency were essentially worthless back then. We had little to lose at the time. That’s not the case today.

  39. ron commented on Jul 11

    so is this what deregulation paradise looks like? are we finally there yet?

    and remember good ol’ phil “mccains econ brain” gramm is one of the guys behind all this mess.

  40. engineer al commented on Jul 11

    I thought the Kudlow crew would find a way to “blame” this on FDR.

    Instead, they (except for Joe Battipaglia)
    blamed it on LBJ.

    They tickled my funny bone.

  41. John commented on Jul 11

    I agree, just relax. The “Decider” and his Crack Economic Team have everything under control. Hank–“Strong Dollar/It’s All Contained”– Paulson and B.S. Bernanke re-iterated today that both Fannie and Freddie are well capitalized — at least according to the Office of Federal Housing Enterprise Oversight. (And the Futures seemed to be up on the news of a “Government Bail-Out” only a few moments ago…go figure).
    Besides, come on, it’s a “GoldiLocks” economy (or so it was only 6 weeks ago) — What’s not to Like???
    On a more serious note Congress needs to get this 300+ Billion Housing Rescue Bill passed, and “The Decider” needs to sign off on the damn thing to Plug up some of the Holes in the Dike. If they can slow the pace of Home Foreclosures/Home Price Declines that should help — at least on a temporary basis.
    My gut reaction however is that while possibly slowing the pace of this “Housing Correction” it will just drag out the Inevitable and probably make things worse.

  42. adam commented on Jul 11

    Samsin: I beg to differ. The revolution was far from complete, which was why Washington consented to become president in the first place. There was a distinct possibility of a second war with the British (which the US probably would have lost) and there was the risk of federal dissolution. There was also the threat of an authoritarian government. Remember the Newburgh conspiracy of 1783, where Washington essentially squelched a coup d’etat.

  43. Ed Miller commented on Jul 11

    I was commenting elsewhere just this morning that this talk from the Fed and Treasury recently is making me think of a classic movie: The Sting

    Henry Gondorff (Paul Newman) is played by Hank Paulson, the seasoned WS con artist.

    Johnny Hooker (Robert Redford) is played by Ben Bernanke, the ivory tower rookie.

    Of course the mark, Doyle Lonnegan (Robert Shaw) is really the taxpayers here.

    The biggest sting in history.

  44. Mean Mister Mustard commented on Jul 11

    Everyone of you monkeys blaming “politicians” or “the government” should stop. The homeowners of this country (prob. 95% of the readers of this blog are in that class) have gamed the system to maintain prices, Fannie and Freddy and just one aspect of that. If those bloated price supporters, I mean ‘companies’, fail, the pound of flesh RENTERS and the POOR should take from everyone else is all the other crap in US policy that props up housing prices:
    -tax deductions (interest, conservation easements, accelerated depreciation, etc.)
    -infrastructure policy that favors suburbs/exurbs
    -cheap money
    Unless you monkeys agree to that sort of deal, you are STILL being subsidized, even if there is a ‘bailout’.

  45. KirkH commented on Jul 11

    “If we won the cold war, why are we acting more like them than they are?”

    Because everybody in power thinks that if they mix some die hard capitalist banking with central planning the two cancel each other out.

    They believe that for two reasons
    1) It’s convenient in the short (20 year) run.
    2) 97% of them don’t know the difference between Carl Menger and Karl Marx.

  46. Mark E Hoffer commented on Jul 11

    I wonder what would happen if more people, as a thought exercise, stitched this:
    Posted by: Ed Miller | Jul 11, 2008 1:48:45 AM
    and, this:
    Posted by: KirkH | Jul 11, 2008 2:27:47 AM

    although, Kirk, when did ‘Central Banking’–Plank #5– begin to = ‘die hard capitalist banking’ ?

  47. lino commented on Jul 11

    “I’ll be long gone before some smart person ever figures out what happened inside this Oval Office.”


  48. Mike in NoLA commented on Jul 11

    Based on futures, looks like many are heading for the exits. Or, will there be a rebound when the intervention is formally announced?

  49. dave commented on Jul 11

    Be careful what you wish for in a failure here. When the short-term commercial paper market looked weak, I changed my brokerage sweep account from a money market to a Federal government bond fund. When I looked closer at the fund allocations, 60% was in agency bonds! We are all sub-prime now.

  50. trail commented on Jul 11

    What about a clawback of all the dividends Fannie and Freddie paid over the last few years out of phantom profits? How about the employees return any bonuses paid on the basis of those phantom profits? Then maybe we can talk…

  51. Mike in NoLA commented on Jul 11

    You know, if this dominates the news today, Steve Jobs is going to be really pissed.

  52. John commented on Jul 11

    These deregulatory capitalists and their shills love to run to good old govt mommy when they are in the doo. I watched a few clips of Paulson and Bernanke’s testimony. These guys looked very, very uncomfortable. They know how bad it is.

  53. dave commented on Jul 11

    As this recession deepens, the Fed Gov deficit is going to explode over the next few years:
    -FNM, FRE, FHLBanks, SLM bond guarantees
    -PBGC pension payments for failing companies-think airlines, GM, F, etc. Ouch
    -Never-ending bail-out bills
    -Never-ending stimulus packages
    -Never-ending war
    -Retiring Fed employees
    -Medicaid for the unemployed
    -Medicaid for nursing homes
    -Medicare and SSN for early retirees who are really unemployable
    -Accelerating FEMA outlays as every thunderstorm is now a Federal disaster

    Interest rates on the Fed debt will someday suddenly rise as everyone sees this explosion while politicians ignore it and make more promises and gov obligations. The Fed debt will suddenly look like sub-prime. The increase in interest payments will supersize the deficit in an upward spiral.

    Goodbye dollar, goodbye savings.

  54. rj commented on Jul 11

    Barry, may I suggest a post with maybe multiple participants that debate the consequences of such a move?

  55. Greg0658 commented on Jul 11

    posted above “Bernanke re-iterated today that both Fannie and Freddie are well capitalized”

    seems if the property titles are held in whole by Fan & Fred then that is a true statement

    now if we let the MSM enflame this to “gov bailout anti-capitalism”

    “no capital for you” maneuver would be a nice turn over to …
    idea from above “the facist regime”

    the damage is done – the dollars were spent – now who gets the real assets in their pile?

  56. patrick neid commented on Jul 11

    Two more wonderful government affirmative action mortgage agencies biting the dust. OK. Lets all act surprised. Long, long ago, back in the 80’s today’s events were prophetized by many. Once the responsibility for a mortgage left the corner bank it was just a matter of time.

    As Barney “that’s not a male prostitution ring in my basement” Frank has so often mentioned, first in Oct 06 before taking over in Jan 07, with the stock trading between $60-$70

    “I think we would come up with something that looks pretty much like what we have now,” to craft new rules for the companies, Frank says. The House-passed bill includes a regulator with powers to approve new products. Analysts predict a Democrat-written bill wouldn’t cap the amount of mortgage-backed securities each company may hold in their portfolios. Republicans and the White House have been seeking those caps, claiming Fannie and Freddie’s vast holdings threaten the U.S. financial system. “With [Frank] in the chair as opposed to [Louisiana Republican Richard] Baker, the portfolio issue becomes probably less likely,” says Keefe, Bruyette & Woods analyst Brian Gardner. Frank adds he wants to work with Rep. Charles Rangel, the New York Democrat who would likely take over the House Ways and Means Committee, to beef up a low-income housing tax credit.”

    And his most recent gem in May 08 with the stock at $30.

    Despite those troubles, lawmakers had few alternatives to asking Fannie and Freddie to buy more and riskier mortgages.

    “I want these companies to help with affordable housing, to help low-income families get loans and to help clean up this subprime mess,” said Representative Barney Frank, a Massachusetts Democrat and the chairman of the House Financial Services Committee. “Otherwise, why should they exist?”

    Big government, ain’t it great…..

  57. maximo commented on Jul 11

    Why are you surprised Barry? You knew who was going to get stuck with the tab if things headed south. The loans were guaranteed by the Fed anyway. The charter in both entities give the Treasury the authority to buy as much as $2.25 billion in each of their securities in the event of possible default. The companies also have access to the Fedwire payments system allowing them to access funding if needed. However, according to Robert Reich it won’t be enough to keep them out of trouble.

  58. Roger Bigod commented on Jul 11

    What do you call it when the government owns a big chunk of the country’s housing? Stealth Socialism? Or maybe more like Mr. Mussolini’s Corporate State, on mild hallucinogens.

    Whatever, it doesn’t sound like anything they told me about in school.

  59. wunsacon commented on Jul 11

    Patrick Neid,

    I hear what you’re saying. But, what did the “party of self responsibility” do during SIX YEARS of one-party rule besides politicize science and the justice department (hire from Pat Robertson’s law school, emphasize porn prosecutions)? Did they cap anything? No, they lowered interest rates to an all-time low and stood in the way of state efforts to stop poor lending practices amid a multi-year bubble in housing. On top of that, they screwed up other things in ways I didn’t think possible.

    I would’ve liked to see the GOP live up to its reputation for fiscal responsibility during those years. But, they didn’t. And as you can see, folks like Ron Paul don’t have a place in today’s GOP. Today’s GOP is the Party of God. Given their reliance on “faith” and less on facts, IMO it’s silly to expect change from them.

    The GOP was “on the pot” for 6 years. Not only were they not productive during that time. You could say they missed the bowl.

  60. Andy Tabbo commented on Jul 11

    Love the Moral Hazard occuring live on CNBC. They just dragged on some guy from Loomis Sayles…..

    He’s buying up Fannie and Freddie bonds because he knows the governement will have to bail them out.

    IMO, some of these bond holders need to get whacked along with the equity holders.

    – AT

  61. wunsacon commented on Jul 11

    “Attention K-Mart shoppers: Fannie and Freddie are now 40% off.”

  62. patrick neid commented on Jul 11


    I completely agree.

    Barney takes the hit from me because when in doubt these guys just want to enlarge. While I fault the Repubs for pigs at the trough I give them a pass on FNM only in the sense that when the stock was trading in $50-$70 range for ten years no one listened to Bush and whomever about the looming risk should a perfect storm occur. As to low rates, that was a solution applied since 87 when Greenspan took over and supposedly saved the day. Reagan, Bush, Clinton and Bush II fell under his purview.

    FNM was basically a quasi big government program that was doomed to go bust. In some sense it was the equivalent of forcing pizza deliveries in bad neighborhoods. What we have now are a lot of dead drivers. Now there’s a surprise!

    To your larger point it goes without saying that Bush and company blew an incredible historic opportunity to bring sanity to a runaway fiscal environment. That they ended up being worse than the original problem is unforgivable. Repubs, when elected, are sent to DC to do two things, and only two things–to cut taxes and to exercise fiscal restraint leading to a smaller government footprint in our daily lives. They failed miserably. As such they have been run out of town.

  63. John commented on Jul 11

    Patrick Neid:
    How odd that they failed the last time they were at the steering wheel from 1980-1992. That’s a bit of an unfair jab at Bush Pere who did at least try to start correcting the problem and as a consequence became a hate figure in his own party. As I recall Reagan tripled the public debt while Bush junior has only increased it by about 75%. I’ll wait for a all the smoke and mirror justifications of it as a percentage of GDP. If the the F’s have to be rescued it will be the final nail in the coffin of the Republicans reckless regime of hands off regulatory policy, and fiscal and monetary mismanagement.

  64. wunsacon commented on Jul 11

    Understood, patrick.

  65. patrick neid commented on Jul 11


    I had no idea the game here was econ101/partisan. Who knew.

    Anyway for entertainment purposes, I had no idea that the infamous Repubs had control of both houses from 1980-1992. I point that out not to embarrass you but that was the nexus of the conversations above. To wit–the Repubs had control from 2000-06 and blew a historical mandate.

    Fairer non partisan minds recognize that divided houses etc usually get nothing done. For the most part, a good thing.

    As to your mindless chatter about Reagan you shall continue where you are–in a minority position. You can console yourself with the thought that you are a contrarian keeping in mind that Begala still loves you.

    Forgive me if I set you off with my snarky Barney Frank comment. I should have not been so open about my dislike for his type of politics/economics.

    As a veteran broker/trader some 30 years I have no use for ideologues/politicians such as yourself. In fact, with no real personal disrespect, I find folks such as yourself to be part of the problem rather than the solution. Your’s is the adolescent position that, in this case Dems, if just left alone could wave magic little wands and all would be good in the kingdom. Myself I find them all, repubs/dems reprehensible, killers of the golden goose. I fear on further examination given the time and bandwidth, that you may even be further down the scale, as you would pretend to lecture on the finer points of knife cutting such that the goose doesn’t realize its dying. Oh well.

    Back to the market to make a living.

  66. ed norton commented on Jul 11

    May I favor Fannie and Freddie investors with this little ode?

    “When the tides of life turn against you,
    and the current upsets your boat.
    Don’t waste those tears on what might have been,
    just lay on your back and float.”

  67. DL commented on Jul 11

    Let the government insure FNM/FRE debt at a rate of 40 cents on the dollar. (This probably wouldn’t cost the taxpayers anything).

    Then, let the chips fall where they may.

  68. Wisdom Seeker commented on Jul 11


    Whereas: The Government of the United States has already taken as many financial obligations as its Taxpayers can reasonably afford; and

    Whereas: The Taxpayers are unwilling to extend, to those who borrowed or lent foolishly or fraudulently and are now in financial trouble, ANY “bailouts”, “credits”, “backstops” or “guarantees” based on access to the National Debt; and

    Whereas: The Taxpayers find that few Members of Congress actually represent the interests of the honest, hardworking, and financially sound Taxpaying Public,


    1) We Taxpayers urge Congress to pass a bill to prevent the Federal Reserve from adding any more sub-AAA securities to its balance sheet and to prevent the Federal Reserve from setting up ANY “off-balance-sheet” enterprises, including but not limited to entities like “Maiden Lane LLC”, and

    2) We Taxpayers urge Congress to pass a bill indicating that should Fannie Mae and Freddie Mac become insolvent the INVESTORS and BONDHOLDERS of FNM and FRE should EAT THEIR LOSSES, and

    3) To rehabilitate the U.S. Mortgage industry a NEW SYSTEM should be put in place which does not create the same MORAL HAZARDs which have brought down Fannie and Freddie! Let private lenders lend at rates that are FINANCIALLY SOUND, without RECOURSE to TAXPAYER FUNDS, and

    4) We Taxpayers will VOTE AGAINST any and all Members of Congress who agree to give or lend OUR TAX MONEY to ANY financial institutions (most of which are FAILING because they traded in foolish or fraudulent loans), or who otherwise debauch the national debt in order to socialize the losses of PRIVATE institutions or individuals, and

    5) We WILL SEEK LEGAL RECOURSE against any and all persons in the Federal Government and/or Federal Reserve who overextend their authority and provide, in any way, access to TAXPAYER Funds for any PRIVATE institution or “GSE” beyond current legistlatively authorized limits without explicit Congressional approval.

    Ben Bernanke, just because CONGRESS won’t rein you in, don’t expect the Taxpayers to sit still for anything you care to do!

  69. Ed commented on Jul 11

    Bush and the Sentors and the Congress ought to be ashamed of letting this Country be ran by CEO,s ,, Of corperate America, Bottom line Bush and his crew a just like CEO,s line there pockets,, At the they will be stuck down like dogs,, living in the world of greed.

  70. Jessica commented on Jul 11

    I don’t see anyway to get to the bottom of this without making changes at the top of our nation that go much deeper than replacing one party with the other. Certainly most of the finance industry, mainstream media, universities, non-elected government officials need to be re-examined. And the rest of the nation that largely went along with this.
    I am not sure which would be worse, if we as nation rolled over for a multi-trillion dollar bail-out. Or if we saw just how orphaned we really are.
    What will serve us best is if we stop acting like there is a big daddy out there somewhere who is supposed to take care of everything. Neither remaining blind “Mommy and Daddy would never let anything bad happen to little me” nor pitching a temper tantrum (Those assholes #$%^&) like the worst imaginable teenager.
    Maybe the most important thing at first will be to distinguish between blaming and learning the lessons we need to learn. A lot of the lessons we need to learn are going to look an awful lot like blaming to those who most need to be held responsible. And they will try to hide behind a media-enabled coo of “let’s not play blame games now”. But temper tantrum blaming will at best only show how we got into this mess. Learning what we need to learn, growing up, will show us how to get out of it.

  71. Sing Expat commented on Jul 11

    I know I’m just a dreamer, but would it not be possible to just once have someone on CNBC, BBC, or Bloomberg stand up and point out the economics of the “subprime” crisis? Not once have I heard any politician, economist, or talking head say that house prices were and are simply too expensive.

    I realize that most of them are Pollyanna’s and con artists, but surely one voice could be heard?

  72. Holmes commented on Jul 12

    Wisdom Seeker: No sub-AAA? Whose rating system are you trusting? Moody’s KMV has clearly shown that “AAA” is a meaningless bunch of letters unrelated to absolute credit quality. How else to explain when the A tranche of a CDO experiences defaults before the first interest payment? And is 40% wiped out within a half-year?

    I don’t disagree with you; rather, I think the problem is the lunatics have been running the asylum. They’ve perverted the rules and words we thought had reason and meaning. I worry that is why a large part of the electorate doesn’t even understand the problem: They think poor lending practices are normal and worthy of praise.

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