WSJ Tearing Mudd and Syron a Pair o' New Cornchutes Too
So Merrill's houses are worth 22 cents while Fannie and Freddie's are worth a buck?...
simply nobody believes a word Fannie's Daniel Mudd and Freddie's Richard Syron are saying, because their interest now is in delaying recognition of any losses and gambling on a turnaround, using the government's credit card.
That gamble may be looking more hopeless by the day, judging by their share prices. But Congress just increased the size of the mortgages they can buy. Washington has all but thrown itself on their mercy to keep the housing market afloat. In theory, Fannie and Freddie can now Ponzi themselves to the sky -- the capital markets will continue to finance them no matter what losses they store up, or even whether they appear to be solvent.
Get your front row seat here.
And remember, these guys earn tens of millions because they have exploited an implicit (now explicit) taxpayer backstop that absolves them of any responsibility from screwing up royal, so long as they screw up royal enough (as they have) to pose a risk to the entire financial system.