U.S. government takes over mortgage giants

Unbelievable - another collosal screw up on George Bush's watch.

This bailout is going to cost the US taxpayer not just in the shareholders' shares in these two companies become worthless, but the total bailout cost is likely to be Iraq War costs x 2.

Well it gave the Nikkei a kick in the pants...

"Another collosal screw-up on George Bush's watch."

Sure, Sushi, blame Bush for the government's decision to create Fannie Mae in 1938.

Sarge, no offence, but judging by your post you don't know anything at all about this latest disaster.

Sushi, The "screw up" as I see it is in bailing the companies out or injecting another red penny into these losers. The effect of allowing them to flop would be enormous, but all we've done now is to push the burden directly onto ALL U.S. citizens - not allowing the loss to fall on investors to these companies - both domestic and foreign.

I agree with Sarge that the downfall of Freddie and Fannie aren't attributable to Bush. These were doomed from the start as all U.S. federal government-backed social experiments.

How well are Social Security, Welfare, Medicare, Medicaid, Freddie, Fannie, etc. doing? All insolvent - we just keep issuing more debt to hand on the necks of our children.

Now where did I store that old guillotine? It's somewhere in my attic, I think.

you don't know anything at all about this latest disaster.

One thing people should know about this debacle is that it is partly due to political correctness. The government placed pressure on Fannie Mae, Freddie Mac and other lenders to offer home loans to more minorities regardless of their credit rating or ability to make mortgage payments. Rather than being fiscally responsible, the lenders buckled and with the help of adjustable rate mortgages, the charade was able to continue for about ten years. At the end of the day, the law of unintended consequences reared its ugly head and -as always happens to those who try to rewrite the laws of nature- many of those unqualified homeowners are now on the street, suffering the shame of losing their home, which is much worse than the shame of being turned down for a loan.

Both Fannie Mae and Freddie Mac have been Government Sponsored institutions since their inception. Social Security is not "insolvent" now but if nothing is changed, it will be by about 2030. Obama's comment: Democratic Presidential Candidate Sen. Barack Obama, D-Ill., said "given the substantial role that Fannie Mae and Freddie Mac play in our housing system, I believe that some form of intervention is necessary to prevent a larger and deeper crisis throughout the entire economy." Now there's a real solid plan!!

America: you guys really need to raise some taxes. I know it's politically unpopular but the time has come. It's not going to be long before the government itself is bankrupt and unable to raise more capital due to its weakening financial status.

Waaaaa!! Waaaaa!! Waaaaa!!

Okay this happened on george bush's watch. It's obvious.

But:

Barack Obama agrees with george bush doing something to help prop them up.

John McCain on the otherhand disagrees. Does he disagree because he is trying to play this I don't agree with george bush any more or is he a complete idiot?

We can't allow FreddieMac or FannieMae to fail. They are backed by the United States and if they fail, we eat the $5Trillion in losses, guarenteed. There is a combination of Chinese loans and investments that can't be allowed to fail.

And remember John McCain even said he doesn't know anything about the economy. And Sarah Palin agrees with John McCain. There's your republican nominees folks. < :-)

Sushi - Is sdmsec wrong?

Social Security, Medicare, Medicaid, would be in fantastic shape if george bush would put back the money he stole to finance the george bush Memorial War in Iraq < :-)

There has never, NEVER been a Social Security a slush fund. The money collected for SS goes into the general fund and always has. If the money collected for social security had been invested from the begining there would be no problem. EVERY administration since FDR has used the SS money for other purposes.

Heh, the Republicans will no doubt be cheering as they watch their hero, George Bush, pull another fast one to destroy the American middle class.

The mounting costs are staggering:

Failed Iraq War: End costs likely to be $2-3 trillion Economic Stimulus Package (due to failing economy under GWB): $168 billion Hurricane Relief 2008: $Anybody's guess Bailing out/Backing Fannie and Freddie: $potentially $6 trillion.

Hello Mr Chinese Banker, can we please borrow some more money off you please - our economy under Mr. Bush is turning to Cool-Aid and we need some more money to help pay off the $200 BILLION we are already currently paying in interest each year on these massive loans, not to mention the capital itself.

Meanwhile, over in Fantasy Land, John McCain wants to continue pouring $15-30 billion each month into the Failed Iraq War.

He thinks this will actually help America!

What is it about elementary school economics that Sen. McCain doesn't grasp?

To add insult to injury, neither John 'No drilling!/Drill Now!' McCain or Sarah 'Bridge to Nowhere' Palin mentioned anything in their speeches about what they plan to do about the economy.

They were just too busy bashing Obama and the Democrats.

The banks and borrowers are the ones ultimately responsible for the mess, not Fannie Mae or Freddie Mac. They just bought the loans the banks created as they've always done, they did not create the loans themselves in most cases.

And it really has nothing to do with Bush, Obama, McCain, Republicans, Democrats, etc, unless you're one of those obsessive types, but those people can be easily identified from their posts and can be placed on the sidelines of the conversation so they don't get in the way of intelligent posters.

for those you that are so much against this, get used to it, because a national health care is going to look the same.

I think we should start getting used to more and more state run institutions as many Americans are nowadays wishing to model the European form of civil services.

Superlib - "And it really has nothing to do with Bush, Obama, McCain, Republicans, Democrats, etc, unless you're one of those obsessive types, but those people can be easily identified from their posts and can be placed on the sidelines of the conversation so they don't get in the way of intelligent posters."

Glad to see you can engage in some healthy self-criticism :-)

This could be a disaster, luckily McCain will win the election so things will end up fine.

If Obama were elected he would dip his hands into the funds to pay for his socialist, white elephant projects, and the country would be bankrupted. The world economy would collapse, and adecade long depression would cause public disobedience in developed nations worldwide.

Fannie/freddie becomes government owned,this had to happen. The borrowers borrowed more they could pay for, Fannie/Freddie lent more than they realistically could recover.

Case of counting chickens,before they hatch,

The mess has been made,someone in washington must go clean up Fannie/Freddie and then sell it to big finance companies that want to buy Fannie/Freddie.

skipthesong - Nobody in America is looking at socialized medicine anymore. That went the way of the Dodo in 1993 when the Senate voted 99 to 1 against it. The target for both parties now is to make medical INSURANCE affordable for lower income individuals and families.

ColAmerica - "If Obama were elected he would dip his hands into the funds to pay for his socialist, white elephant projects, and the country would be bankrupted. The world economy would collapse, and adecade long depression would cause public disobedience in developed nations worldwide."

Naturally, you will be able to provide proof of this claim if asked?

I will ask. Please provide proof to back up your claim.

The world is waiting.

This could be a disaster, but luckily America is not going to elect Sen. McCain otherwise this situation will undoubtedly become even worse than it already is.

SushiSake3- Obama is a socialist/communist sympathiser. He has many social plans hidden up his sleeve, whcih will be to the detriment to the hard working folk who create Americas wealth.

Freddie and Fannie would be Obama`s piggy bank, to indulge his dreams.

These ntionalisations will be safe under the prudent Republicans , but Obama would destroy them, we would all be in peril.

So, Sushi, is sdmsec wrong?

sushi: how many times are you going to pain the war is our only problem picture?

The US government has gotten its hands into many things.. have you heard of HUD? have you seen the costs of public education (yup, the government controls that too.. which is probably why we now have one of the worse), the cost of our penal system, the cost of illegal immigration, social security payouts, and the list goes on forever and yes, I agree the war seems not to be worth but do you really think the money not used in the war will be saved? I don't and don't give us that Obama speech what he will do, because he sure as heck didn't do it for Illinois.

Fannie and Freddie were created by the US government. During the Clinton years and then re-introduced with GWB, so many lending institutions were forced by the government (or risk losing quite a bit in bennies) to provide loans to people who knowingly couldn't afford them.. These banks even gave out millions in home loans to illegals, which even you must raise an eyebrow to.

more coming.. gotta go right now.

Glad to see you can engage in some healthy self-criticism :-)

It probably wouldn't take you more than 5 minutes to read up on Fannie Mae and Freddie Mac, what they do, and how the current situation was caused. I urge you to do it so you can contribute to the conversation in a meaningful way.

why do you Sushisake always go off subject when someone says hey your wrong so and so had nothing to do with this current problem....

Sushisake response is always BUSH did this and that and this and that.... Please for once in your life look at the real facts and figure this out (even if your not an American you should understand) that if those two bodies went under most of the world stock markets would crash... and it was going to happen no matter who was president as the mortgage companies gave loans (for 20 years or so) to people who had no way to maintain those loans...and fannie mae covered those loans, allot like Japanese goverment who borrowed money to people for starting companies that never became companies....

Being one sided in politics makes you respond to a normal problem in a political way, when the problem had nothing to do with just one party, its been a problem for years and years and no one in either party has solved it nor tried... It was a problem brought on by the greed of mortgage companies and the goverments desire to make housing available to all.. It was a failure to start with, but maybe we can blame it on the next person we dont like in politics..

ColAmerica - "Obama is a socialist/communist sympathiser. He has many social plans hidden up his sleeve, whcih will be to the detriment to the hard working folk who create Americas wealth.

Freddie and Fannie would be Obama`s piggy bank, to indulge his dreams.

These ntionalisations will be safe under the prudent Republicans , but Obama would destroy them, we would all be in peril."

I know you can't put up a shred of proof to back these claims up :-)

Fannie/Freddie lent more than they realistically could recover." Correction, you should have written "were forced to lend out more than could recover"

Techall: thanks for clarifying that. And yes, you are correct but I still think the majority of people are mis-reading that. It is, for the most part and when translated into laymen's terms, being sold as a national health care which most think is national medicine.

techall - Speak for yourself.

Nobody in America is looking at socialized medicine anymore.

Speak for yourself. < :-)

techall - There has never, NEVER been a Social Security a slush fund.

You are wrong!!!!!

http://en.wikipedia.org/wiki/Social_Security_Trust_Fund

george bush stole from Society Security Trust Fund to continue his trumped up war in Iraq. < :-)

America: you guys really need to raise some taxes. I know it's politically unpopular but the time has come. It's not going to be long before the government itself is bankrupt and unable to raise more capital due to its weakening financial status.

No Sir!

I prefer to eliminate about 85% of the federal budget. No need to raise taxes.

Let's start by eliminating all forms of foreign and corporate welfare followed soon after by eliminating individual welfare.

sdmsec - Let's start by eliminating all forms of foreign and corporate welfare

I agree with this portion of your post. That includes Isreal's welfare. < :-)

These ntionalisations will be safe under the prudent Republicans , but Obama would destroy them, we would all be in peril.

That's some spooky thinking right there.

Supposing you're right (which I don't), don't you realize that any power claimed by Republican leadership now will also be wielded by Democratic leadership when they're in control.

What I see are two major parties that want more and more power centralized in Washington D.C. They only differ in who they want to advantage and who they want to penalize. At one time I was taught that the federal governments job was primarily to provide for the common defense of the states and to regulate commerce (provide a level playing field). Now we see all the industries turning to the federal government seeking advantages. We see politicians pandering to the ignorant masses in order to buy their votes.

sdmsec - This is the first time we have agreed on anything.

Have a good day. < :-)

The irony of the government taking over FNMA is that originally it was a government agency. It worked extremely well after its initial creation as part of FDR's New Deal. However, in 1968 it was privatized. Nevertheless, it still continued to work quite well so long as it purchased mortgages that met certain qualification standards as a way of freeing up funds to enable lenders to make new mortgages. However, because of its private ownership, management decided to take more risks in order to obtain greater short-term profits. As a result, the managers got rich but the taxpayers are having to pay for the managers' incompetence as exemplified by their excessive risk-taking.

And where did it say in your link adaydream that Bush spent the money in the trust fund? All presidents use the extra money taken in from overpayment and put an I O U in the box including Clinton, Bush, Carter, Reagon... and on and on... telling half the truth is still lying..