The Biggest Losers – Behind the Christmas Eve taxpayer massacre at Fannie and Freddie. – this is the best summary I have seen of this sleight of hand. (BC) – WSJ Opinion
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Timothy Geithner Meets Vladimir Lenin – John P. Hussman, Ph.D. – … The Treasury’s action last week completes this circle. It provides a surprise pledge of public resources to make these mortgage loans whole, and an unlegislated commitment to make the “implicit” backing of Fannie Mae and Freddie Mac explicit. All without debate, and without the force of public will. … This policy is likely to lead to far more delinquencies. … What will be a game-changer is if Congress fails to recognize that the Treasury’s action is at minimum an evasion, and possibly a usurpation of powers that are enumerated to Congress alone. If Congress does not forcefully defend that prerogative – even if it ultimately ends up voting for exactly the same policy – it will have relinquished the power of fiscal policymaking into the hands of unelected bureaucrats … – Hussman Funds
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Fed economist calls for US government MBS guarantees – … “There ought to be government-backed ABS,” said Fed economist Wayne Passmore in a presentation to the American Economic Association. … – Reuters
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Fannie and Freddie – Peter Demirali – … If they had realized those losses, they would need to go to Congress and request additional funding. This explains why Treasury decided under the cloak of midnight to relax the unwinding and shrinking of these two institutions, and did it before Congress got involved. Congress does not appear to be as acquiescent and accepting as the current administration. Our view is this merely prolongs the inevitable and unpleasant decisions that need to be made regarding these two institutions. Our view is that the day of reckoning is near on the GSEs … – Cumberland Advisors