Fannie and Freddie's End Run
December 28, 2009 09:39 AM EST by Elizabeth MacDonald
Expect dismal fourth-quarter numbers for Fannie Mae (FNM) and Freddie Mac (FRE), as the Treasury moves to pacify the markets by lifting their total credit facilities beyond $400 billion.
With that move, largely ignored in the holiday rush, the White House deftly avoids a nasty, negative headline criticizing the two biggest basket cases in the markets, publicly traded companies who got the biggest total bailouts of all because they are hostage to the Congress’s every housing desire.
Fannie and Freddie are portraits in miniature of a government distorted housing market getting a government bailout. Amid rising defaults, both made unusual disclosures recently, noting that the government's pressure on them to assist the housing market could cost taxpayers.
But by lifting their credit lifelines, Congress avoided yet another bailout for Fannie and Freddie from an already embattled, bailout-happy Congress.