A merger of incompetents:
“U.S. regulators seized Fannie Mae and Freddie Mac in September amid a rise in mortgage delinquencies that led to a combined loss of $108.8 billion last year. The U.S. Treasury has injected $59.8 billion in emergency funds into the companies.
Executives at Washington-based Fannie, the larger of the two, have discussed internally the possibility of taking over McLean, Virginia-based Freddie’s operations, according to people familiar with the matter. A formal approach isn’t imminent, said the people, who asked not to be named because the discussions are private.
A merger would be the quickest way for regulators to cut costs by reducing Fannie and Freddie’s combined 11,000-person workforce, shedding underperforming mortgage assets and reducing the bureaucracy of running two companies with identical functions, said Christopher Whalen, co-founder of Institutional Risk Analytics in Torrance, California . . .”
“It’s got to happen; we’re not going to put them back the way they were,” Whalen said of a merger. “The only way we’re going to be able to manage them is if we squeeze every last ounce of savings out of the administrative side and just focus on trying to keep the loss number under control.”
Great! I can just hear the new TV commercials: “Say Good-Bye to Fannie, Freddie — and say hello to Frannie!” Look for it sometime in mid-2010…
Say Good-Bye to Fannie, Freddie as Housing Woes Wreck Status
Bloomberg, April 15 2009
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