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Mayhem in the Capital

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July 12, 2008 – Comments (3)

You'd think these chuckleheads would get their messages straight, especially since at a time like this, perception is everything.

You have Chris Dodd (a perennial frontrunner for my personal "dumbest guy in the room
" award and a potential Obama VP pick, by the way) flapping his gums about opening the Fed discount window to Fannie and Freddie.

Then someone at the fed -- maybe someone who understands that a bailout should be identified as such, and that it won't help insolvent banks just to throw them more cheap money -- said "Um, no, that's not on the agenda.

Bernanke "reportedly" said that the GSE's could tap the discount window, since hey, why not get more cheap money backed by taxpayers?

Who's on first again?

3 Comments – Post Your Own

#1) On July 12, 2008 at 11:23 AM, leohaas (33.01) wrote:

You are absolutely right, but it would not surprise me if help for FNM and FRE is going to happen in some form. I closed my underperform picks on these two for that exact reason...

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#2) On July 12, 2008 at 1:44 PM, SemperGumby77 (65.06) wrote:

I've been hearing more and more talk about nationalizing FNM and FRE, and while I hate to see stuff like this happen from a moral hazard standpoint, I'm beginning to face the grim reality that eventually, the gov't will have to step in. I just don't see any way that they let them fail.

Its going to suck to be an American taxpayer the next several years, especially when this all could have been avoided through some regulatory oversight of lending practices.

Just another failure on the part of the current White House and  its equally incompetant Federal Reserve.

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#3) On July 13, 2008 at 7:34 PM, TMFBent (99.82) wrote:

There's something that sucks far worse than nationalization, and that's the wuss plan the feds came up with this weekend.

Essentially, it's business as usual, with explicit government backing and even more low-cost capital pumped into these two losers at taxpayer expense.

Nothing like socializing the backstop and allowing private companies to continue paying out dividends to the undeserving equity investors...

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