CaptBob

How Do We Get Out of the Mess with Fannie and Freddie?

I'm going to cheat: Moved my comment-- already made--same subject, different location--please excuse.

The Investment bank of last resort is the Fed.
But they must have a good "Humanitarian & quality reason to appease Congress on a move of this magnitude. Bailing bankers with tax dollars is getting unpalatable.

The poison pill in the whole mess are sub-prime mortgages. They were created by greedy bankers but now they bite all who touch them, bankers and unsophisticated/innoce... homeowners alike.

I believe Congress will create a "Homeowner safety net". The houses are built, bought and paid for. To toss families in the street and create deteriorating, vandalized, vacants, exacerbates the loss. At best they are auctioned for 30% of value, depressing 100% of the market Nationwide.

This "safety net" will funnel the loss difference from the Fed to Fakee & Foolie to take over and rewrite the mortgages in a manner the occupants can afford-(with pain attached). The phonies-(application liars and speculators , for resale) will be sold off in a trickle the market can absorb.

This of course will require Zimbabwe Bennie to go for an advanced course in turbo charging a printing press. And will result in the dollar going from medium/rare to well done in the cooked dept.

But no matter how you turn it, there are only fiat dollars in the lifeguard tower. Might as well make some political hay out of it, that will fool most of the people most of the time. And give the other big banks--(their buddies) a chance at a Phoenix resurrection, by unloading a PORTION of their stink on Fric & Frack. With their books who's counting??