Socialism cannot compete!

Added Liquidity Part of the Problem, Not the Solution

It's just not working. Search "Fannie Freddie subprime", choose the marketwatch dot com link to the article titled "Fannie, Freddie seen facing subprime losses", dated July 27, 2007.

Here's the first few paras:

[quote]
SAN FRANCISCO (MarketWatch) -- Fannie Mae and Freddie Mac could have $4.7 billion in unrealized losses from the deterioration in subprime mortgages, Citigroup's fixed-income strategy team estimated on Friday.

The bank's strategists said that probably won't be a big problem and argued that recent moves in the credit-derivatives market suggesting Fannie (FNM) and Freddie (FRE) are more risky have been overdone.

The estimated $4.7 billion in losses represent about 6% of the equity capital of the government-sponsored mortgage-finance giants, the strategists noted, adding that Fannie and Freddie's retained portfolios contain roughly $182 billion of subprime bonds, most of which are rated AAA.

By contrast, their total mortgages exposure is pegged at more than $3 trillion. Most of this is related to prime mortgages, which is supported by the fact that delinquencies in their guarantee portfolios have not increased so far this year, Citigroup said.
[end quote]

Note that this is over a year ago, and losses have mounted steeply since then, ending with the bailout of Fannie and Freddie.

No subprime at F&F???