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Fannie/Freddie Bailout ‘Disastrous Fiasco’

September 9, 2008

Grace Cheng submits:

Back in March when it was announced that Bear Stearns (BSC) was to be taken over by JP Morgan (JPM) with financial backing from the Fed, the US stock markets had a nice rally (albeit a short-lived one) as investors felt more confident of the Fed’s commitment to save the day. Today the same scenario is played out in the stock markets around the world, from Asia, Europe to the US, but this time it involves a different party – two parties instead. On Sunday, the US government announced the near nationalization of US mortgage giants Freddie Mac (FRE) and Fannie Mae (FNM), the largest and costliest bailout ever in history by the Federal government, with the massive burden placed squarely on plebians’ shoulders (re: taxpayers like you and me). Predictably, politicians applaud the move and traders joined in the euphoria of the week.

Personally, I think this is a disaster from the start, and from the way only-in-name regulators, politicians, etc. have handled this, it is a disastrous fiasco, a large scale crime that both bystanders and participants have committed, and absurdly, a crime that doesn’t result in punishment for those involved.

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Fannie/Freddie Bailout ‘Disastrous Fiasco’

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