squawk

Three Problems with the Fannie / Freddie Mortgage Modifications

Haven't studied the latest program, but IMHO, the only way such a bailout makes sense, if like Paulsen's proposed bailout to the banks, the US Gov't receives an equity participation for the bailed out collateral so, when the market recovers, however long it takes, the gov't (i.e. taxpayers) receives a RETURN for bailing out these borrowers who shouldn't have been given these loans in the first place.

Policy-wise, I can understand the need for a "quick-fix" in order to preserve real estate values in nearby areas where borrowers are making monthly payments & are not underwater. But the leaders in Washington need to communicate to these imprudent borrowers there's no such thing as a free lunch. The policy should be "I will help you now, but you will pay me later" in the form of equity. There is absolutely no reason why these borrowers should keep 100% interest in their home after receiving a gift at the taxpayers' expense.

Palin, On the Ongoing Financial Crisis

What's your point other than to slam Palin? You're quick to criticize, but are apparently too weak to provide any analysis to support your comment, so you leave to posters.

Fannie & Freddie have been way too expensive to the American taxpayer. You had execs reaping $15MM paycheck while being asleep at the wheel. Now you have the US Gov'ts bailout. How can you not agree Palin's statement on that point?

Are they too big? Well, that comment may be interpreted in a number of ways. The mortgage market is huge, and FNA & FRE played an important function in providing low cost mortgage financing to US homebuyers. How big should FNA & FRE be? Dunno. But I think Palin's comment w/r/t size was more focused on cost than any other metric. JMO.