Severances assailed for Fannie, Freddie

Crooks to the core.

Where is the outrage? This should be all over the MSM and people should be howling for blood and prison time!

It seems to be the new American way. Continue to have faith in the mathematical risk reduction models, then when they collapse, the government bails everyone out (especially the rich) and no one learns a thing. http://theendisalwaysnear.blogspot.com/2008/06/oh-yeah-that-war.html

Oops, wrong link: http://theendisalwaysnear.blogspot.com/2008/09/prediction-black-swan-and-911.html

As part of the investigation by the Senate Banking Committee a review of the bailout and the treatment of the Preferred shareholders in the bailout should be included. In April/May 2008 at the encouragement of the Treasury Fannie Mae issues approximately $7 billion in new Preferred shares typically purchased by investors seeking both safety of principal and income. The shares were purchased with the idea that if the Treasury was encouraging the issuance they would be protected from default. The bailout announced last week literally pulled the rug out from these individuals after just 4 months. Many of our financial institutions also purchased the shares for the same reasons and now in addition to all of their other write-offs they need to write down the value of these shares. It is truly unconscionable that our Government would take advantage of the individuals who tried to assist 4 months ago by buying the new issuance. It is truly sad when our Treasury is more concerned with foreign investors rather than the individuals of our country.

I thought we were to have learned something from the S&L mess of a few years ago. Guess not. HW

AngM: "The shares were purchased with the idea that if the Treasury was encouraging the issuance they would be protected from default." This situation is still a travesty of Govt. oversight, but your comment is not exactly correct: Everyone knows that Fannie and Freddie are private companies - anyone thinking that the govt. was encouraging or even expressing confidence in a stock issue doesn't know the mortgage business that these companies do; the relationship between the fed and them. The govt. only backs a VERY small percentage of the mortgage business that Fannie and Freddie do. Typically, the low-income, riskier loans. The article above hit it right on the head: This bailout is due to executive shenanigans in which they dump all their bad decisions on the taxpayer. Due to the fact that the govt. backs their riskiest loans, Fannie and Freddie get a competitive advantage and have become so big they're a 'single point of failure' in the entire mortgage industry. The govt is coming to the rescue of MUCH MORE than those low-income loans they committed to. It's time to get our govt. out of the mortgage business for good, even the playing field. If we taxpayers are bailing Fannie and Freddie out, I say we now OWN those companies. Let's sell them and get our money back.