#1. Fannie has a default rate of 1.2%! They are writing new debt every single day and selling it quite well right now. That means the company is doing business the increased foreclosures are a percentage loss to their bottom line. They have lost some big money as of late, but people act like they are foreclosing on half their portfolio! It is only 1.2% of their debts that have defaults and not all of those foreclose.

#2. The government hasn't spent a dime of taxpayers dollars yet. If they buy into Fannie and Freddie, they will probably make profit from it long term. The most likely event would be Freddie borrowing some cash from the Fed at 2.25%, which the fed allows investment banks to do anyway.

#3. The biggest threat to Fannie and Freddie is over. The single largest threat to them both was a loss of confidence int he bond markets. If investors quit buying their paper… game over. That issue is dead. Investors now know that old Uncle Sam is behind them and the debt is low risk. As long as they can sell their securities, they can move forward and make money.

Side note – Fannie and Freddie have never really done a lot of “risky” loans. I am a loan officer and trust me, Fannie and Freddie kept their noses clean. I am not saying they are in great shape here, but they are just suffering from the tremendous mess caused by the subprime idiots. THIS IS A SUBPRIME CAUSED CRISIS NOT A CONFORMING CRISIS.

Ryan

I think George Soros' former partner Jim Rodgers has it pretty well pegged:

““These companies were going to go bankrupt if they hadn't stepped in to do something, and they should've gone bankrupt with all of the mistakes they've made,'' Rogers said. “What's going to happen when you Band-Aid and put some Band-Aids on it for another year or two or three? What's going to happen three years from now when the situation's much, much, much worse?'' “

http://www.bloomberg.com/apps/news?pid=20601087...

There seems to be a lot of speculation that somehow this backing will result in the failiure of our banking system when in fact it will lead to more stability. The country simply can not afford to have conventional mortgage money dry up. Too many sectors of our economy depend on a healthy housing market.

The GSEs have been successfully operationing since the 1930s and have produced hugh profits. I personally think that when all of the dust settles the taxpayers have made a wise investment.

Keep in mind that at the moment the GSEs capital levels are adequate. Keep in mind that housing would need to fall another 20% and delinquencies would need to rise several times forefold for them to run out of their present capital base.

What the fed did today is what we all should have expected them to do. The only people that are truly upset are the short sellers. GREED

This shill of an economy has finally run out of steam.

Welcome to reality. The country is broke and the jobs are disappearing faster than the value of Fannie stock.

The party is over.

Do not forget a few years back when Freddy had an accounting scandal..they were hiding money because they made to much, and was saving for a rainy day.

I really think the government is looking at taking over Fanny and Freddy bailing them out of our national debt. Knowing that in a short time, a few years, Fanny and Freddy will be the cash cow once again.

This time Fanny and Freddy will be more of a cash cow than ever, the majority of their competition are out of business. So most America's will have to get a loan with Fanny or Freddy.

By allowing rates to be so low, and allowing crazy loans the powers that be knew this was coming, and dare I say made it happen.