Wednesday, August 20, 2008

In-Depth Look: A Bailout for Fannie and Freddie?

Analysis and Discussion with Paul Miller of FBR Capital Markets: Government Will Step in if Debt Auctions Fail; Buying Fannie or Freddie is a Bad Bet, Both Will Need to Raise $15 Billion


Virgo said...

I'm a little confused. So Fannie and Freddy own something like 6 trillion dollars in mortgages/ mortgage backed securities. Does a bailout mean that the government will 'own' the companies and be responsible for 6 trillion dollars? I'm still not very clear what a government bailout really means. How much money would a bailout cost initially and in the future?

Randy said...


My understanding is: F&F need to roll over almost $250B in debt this quarter and will have extreme difficulty in doing so.

The much discussed Gvt lifeline has promised ~ $25 Billion immediately while raising the US debt limit to $10.6 trillion (from $9.8T).

Taxpayers could be on the hook for billions -- the centrepiece of the legislation would create a new program at the Federal Housing Administration to insure up to $300billion in refinanced 30-year fixed loans.

With that, I really don't think anyone can answer that question better than Jim Rogers

Jim Rogers : Let Fannie and Freddie go Bankrupt