icandoitdon

Fannie, Freddie Bailout To Wipe Out Equity Holders?

i'm one of those who want GSE blood. for years, analysts and economists warned about the perils of having so much mortgage debt in the hands of these GSEs. not only were the many warnings ignored by their government sponsors, but FNM and FRE increased their exposure to high-risk mortgages in recent years to maintain market share. bankruptcy and nationalization is the only thing that will break the back of that flawed model. taxpayers will take a hit but eventually those organiations will be reconstituted without government sponsorship.

investors who bottom fished based on the premise that these companies were too important to fail or because of management's and government's assurances that they were "financially sound" were the victims of their own misjudgment.