The $5 trillion mess

[UpInArms]

Source: CNN

NEW YORK (Fortune) -- They own or guarantee $5 trillion worth of mortgages- nearly half of all the country's outstanding home loan debt - and they're crashing. But not everybody is convinced they should be.

Fannie Mae and Freddie Mac are struggling with an investor loss of confidence so great that, while they're unlikely to go under, they could conceivably see their ability to function impaired. That would wreak yet more havoc on an already wrecked housing market - making loans tougher to come by and possibly pushing hundreds of billions of dollars in cost onto U.S. taxpayers.

The extent of their troubles is in debate. Several analysts and a former Federal Reserve governor have said the two companies desperately need to raise money to continue their business of buying and guaranteeing home mortgages.

Others, including Fannie and Freddie, their regulators, some Wall Street analysts, and Sen. Christopher Dodd, D - Conn., the chairman of the Senate Banking Committee, have defended the strength of the two companies.

"What's important are facts - and the facts are that Fannie and Freddie are in sound situation," Dodd said on CNN's Late Edition on Sunday. "They have more than adequate capital. They're in good shape. The chairman of the Federal Reserve has said as much. The Secretary of the Treasury has said as much."

Read more: http://money.cnn.com/2008/07/11/news/economy/fannie_freddie.fortune/index.htm

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The day I believe anything that Chopper Ben and Hanky Panky Paulson say, I'll eat dirt.

(edited for clarity)

[Tutonic]

1. And what is Chris Dodd doing? trying to cover his back regarding

that illegal home loan that he took for himself? I swear I can't keep track of who is steering the Titanic these days.

[high density]

2. illegal? WTF are you talking about.

Dodd got a good deal on a loan, which hardly a rare or special thing when it comes to the rich and powerful in this country or any other.

[HowHasItComeToThis]

10. I NOTICE THAT THERE IS FINANCIAL CHAOS WITH EVERY REPUBLICAN ADMIN

[Hugin]

12. Good eyes there, YEBBA.

Kind of noticeable isn't it?

:hi:

[DarthDem]

13. So True

The last time I remember it being this bad was in 1992. No coincidence.

[liberal N proud]

15. And your republican friends still can't seem to correlate that fact

Can they?
I have been arguing for cons for years, showing them the charts and evidence yet they will deny that the republicons have anything to do with economic woes in this country.

[MindMatter]

18. It is not incompetence. It is intentional

It is organized crime on a scale that boggles the mind. They have been doing this for generations, but lately they have gotten so good at it that they have taken it to a whole new level. Of course it helps that there is no longer any effective media to bring this to light or an effective political opposition to enforce consequences.

With the Savings & Loan scandal, they were able to deal themselves hundreds of billions of dollars. Yes, of course, this eventually led to a collapse of the system leaving the taxpayers with a $500,000,000,000 bill. But that was the whole point, after all. And the chaos that they CAUSED created further opportunities for them to plant the seeds for their next crime spree.

This one is an order of magnitude greater than the S&L scam, but the formula is exactly the same. Work the system. Extract billions. Leave the taxpayer holding the bag. And when the shit hits the fan, the fog of chaos presents the opportunity to set up for the next heist. The actions of the Fed yesterday will undoubtedly set these crooks up for another big take.

The rule always is "Privatize the profits, socialize the risks." Memory that slogan and you will do well.

This formula is used over and over again. They are in the process of breaking the back of the taxpayer by running about a trillion dollars of spending a year through the Pentagon. That will probably be next year's moment of chaos. It is all by design.

Steal like there is no tomorrow -- create a moment of crisis that allows you to dump the problem on the taxpayer -- start planning the next scam.

[HowHasItComeToThis]

19. YES, INTENTIONAL LIKE GREED

[dixiegrrrrl]

3. Again with the "possibly pushing hundreds of billions of dollars in cost onto U.S. taxpayers."

Mr and Mrs and Ms and Miss average American, the ones who do not read DU, do not read blogs, who only see or hear MSM, Parade Sunday insert, Fox News and Limbaugh radio, have no clue that we live under a regime that has made US citizens responsible for paying hundreds of trillions of dollars
of war debt, consumer debt, housing debt, Wall St. debt, all the "backed by the full faith of the United States Government" debt ( Treasuries, now worthless), all the contractor "good ole boy" rip off debt, plus trillions more to replace what the Pentagon and other agencies simply stole or gave away, so much debt there are not enough zeros to even talk about it, not enough planet time for enough generations to even think about paying back 2 cents of it.
And Mr and Mrs and Ms and Miss average American have no realization that their retirement funds, their sparse Christmas club savings, medical savings are worth...nothing. Soon to be wiped out, gone in a an electronic blip of the eye, all because the Neo-Con racketeers have made the "the U.S. taxpayer" ultimately responsible for the biggest global Ponzi scheme ever devised and the bill due for it is growing larger and getting closer every single day.

[jpertello]

11. Very good analysis

I am discussing this in almost the same words daily. The enormity and magnitude of the crimes of the present government cannot be fathomed in current economic terms.

[daleo]

4. Why the federal bail-out guarantees then?

"What's important are facts - and the facts are that Fannie and Freddie are in sound situation," Dodd said..."

You don't book a standby operating room for a patient that is in sound condition.

[soothsayer]

5. Well. you might if the patient has lunatic, suicidal relatives

just to make them shut up

[ShockediSay]

6. How did we gt here?

the richy-rich aren't paying their country clubbers dues

the Iraq war was a policy disaster, a fiscal disaster and a monetary disaster

and so here we are, at the lowest point of American strength since the early years
of the depression

[skoalyman]

7. this next week should be interesting

:popcorn: :scared:

[Q3JR4]

8. Yes it should.

Even though all I have is debt, I think I'll join ya.

:scared:

Q3JR4.

[lostnfound]

9. Is this another manufactured disaster? nt

[sendero]

14. I don't think so..

.... it is another organized looting. And the smart money Republicans probably knew the party would eventually end, but they all thought it would be a Dem adminstration in power by that time.

Their timing was off. And perhaps their estimation of the severity of the crash.

[Hydra]

16. It's been a manufactured disaster

Since 2006. And it's only half over...if that.

Bush and his friends are making a KILLING however. One of Greenspan's friends had a "hunch" and bailed at exactly the right time before the housing crash making in the realm of 4 BILLION dollars for himself.

I rest my case.

[OneBlueSky]

17. to paraphrase the late . . . somebody or other . . .

"A trillion here, a trillion there . . . pretty soon you're talkin' real money." . . .