You know I just can't resist kicking a dead horse. Two of them, in fact.
I like how some market observers suspend their disbelief when examining the Treasury's actions, as if they're watching some Hollywood action fantasy. Allow me to clarify: The U.S. Government has made it absolutely clear that it has committed its full faith and credit to the solvency of Fannie Mae and Freddie Mac's debt obligations, placing its own solvency at great risk. Mainstream commentators seemingly don't want to come out and say this, because if they said it now they won't have anything fresh and entertaining to write about for the next few months.
Here's a thought: Why not just fold these two bankrupt zombies into Ginnie Mae? Would that really require a team of Constitutional law specialists or a change in the law?
Any decision to add Fannie and Freddie to the budget wouldn't automatically translate into an explicit government backing for the companies' combined $1.7 trillion in unsecured debt and $3.5 trillion of mortgage guarantees. Granting the full faith and credit of the U.S. would require an act of Congress to change the companies' legal status.
I like how some market observers suspend their disbelief when examining the Treasury's actions, as if they're watching some Hollywood action fantasy. Allow me to clarify: The U.S. Government has made it absolutely clear that it has committed its full faith and credit to the solvency of Fannie Mae and Freddie Mac's debt obligations, placing its own solvency at great risk. Mainstream commentators seemingly don't want to come out and say this, because if they said it now they won't have anything fresh and entertaining to write about for the next few months.
Here's a thought: Why not just fold these two bankrupt zombies into Ginnie Mae? Would that really require a team of Constitutional law specialists or a change in the law?
