Time to Let Fannie and Freddie Wither?


	Time to Let Fannie and Freddie Wither?

JICWyllie

7-13-2008 7:19 AM

179 views

tags:

economy, financial markets, i-crisis, i-insolvancy, i-policy

JICWyllie says:

Foreign holders of FNM and FRE paper must be losing a packet, too.

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<div style="margin: 12px 0px; font-family: arial; color: #333333; background: #ffffff; border: solid 4px #e5e5e5; width: 100%; clear: left;"><div class="CM_CTB_Content_Wrap" style="margin: 0px; padding: 0px;background-color: #ffffff;"><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content.clipmarks.com/blog_embed/169684db-c0fd-4b09-988e-4f7582f7ab5a/FB2785EE-1CDC-4F2E-9AC2-FEC6B9B515AD/" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://www.businessweek.com/bwdaily/dnflash/content/jul2008/db20080711_018362.htm?chan=top+news_top+news+index_top+story" href="http://www.businessweek.com/bwdaily/dnflash/content/jul2008/db20080711_018362.htm?chan=top+news_top+news+index_top+story" style="font-size: 11px;">www.businessweek.com</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.businessweek.com/bwdaily/dnflash/content/jul2008/db20080711_018362.htm?chan=top+news_top+news+index_top+story">while it's clear that Fannie and Freddie can't be allowed to go under abruptly, a good case could be made that the two mortgage financing giants headquartered in Washington's Beltway are part of the <A href="http://www.businessweek.com/magazine/content/08_27/b4091032364818.htm">problem in housing</A> (<CITE>BusinessWeek</CITE>, 6/26/08) rather than part of the solution. If that's so, then this might be an opportune moment to let them begin slowly to wither away.</blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.businessweek.com/bwdaily/dnflash/content/jul2008/db20080711_018362.htm?chan=top+news_top+news+index_top+story">
Some people are already making that case. Peter Schiff, head of <A href="http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?capId=29248760">Euro Pacific Capital</A> and a bear on the U.S. economy, has been a longtime critic of Fannie and Freddie. He blames them for helping inflate the housing bubble. Says Schiff: "It was a self-perpetuating spiral. We would buy things and send these dollars abroad. And because yields on Treasuries were so low and foreigners had so many dollars, the vehicle of choice was Freddie and Fannie bonds."</blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.businessweek.com/bwdaily/dnflash/content/jul2008/db20080711_018362.htm?chan=top+news_top+news+index_top+story">
The flow of foreign money into U.S. mortgage-backed securities—from places like China, Japan, and the OPEC nations—stimulated a boom in home purchases. </blockquote></div><div style="margin: 0px 6px 6px 4px;"><table style="font-size: 11px;border-spacing: 0px;padding: 0px;" cellpadding="0" cellspacing="0" width="100%"><tr><td style="background:transparent;border-width:0px;padding:0px;">&nbsp;</td><td align="right" style="background:transparent;border-width:0px;padding:0px;width:107px" width="107"><a href="http://clipmarks.com/share/FB2785EE-1CDC-4F2E-9AC2-FEC6B9B515AD/blog/" title="blog or email this clip"><img src="http://content7.clipmarks.com/images/c2b-foot.png" border="0" alt="blog it" width="107" height="17" style="border-width:0px;padding:0px;margin:0px;" /></a></td></tr></table></div></div>

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