A hot topic on CNBC this morning was Fannie Mae’s influence on the financial crisis in conjunction with bad mortgages sold on Wall Street. The article attached below discusses Fannie Mae’s attempt to seek 8.5 billion from taxpayers in order to cover some of their losses. Fannie Mae has already taken $100 billion from the U.S. government since it was seized in 2008. In regards to getting our economy back and getting money paid off, what do you think Fannie Mae should do? If Fannie Mae does not pay its losses, not only will the firm go under, but also the money they owned in interest will be lost. In my option, money owned being unpaid seems to be what started this crisis and I do not see that as a sound option.
http://www.cnbc.com/id/42935923
I think this article brings up many points we have covered in class already but further shows the scale of the problem. One of the issues discussed is whether the government should be bailing out these companies. The scale part is described in all of the dollar amounts. 164 billion dollars were needed by these two companies to stay "alive." I think the worst part about this article for people in the U.S. is when they said that "the plan to put them into conservatorship was meant to be temporary, although it is likely to be years before a long-term replacement structure takes shape."
ReplyDeleteI worry that the government bail out is becoming a long term strategy. We just can't afford to keep giving these firms tax payer money, but at the same time I certainly can't think of a better solution right now! I just hope a more long term strategy can be reached, and that Fannie Mae and Freddy Mac can soon start having their loans repayed by those who owe them.
ReplyDeleteI agree with Mark this shows the scale of the problem. I think that we make a fundamental mistake when we bail out companies. The government gives money without seeing a plan. Now I understand this is a tough situation since we are dealing with the market and currency value, but there has to be some sort of plan of action. Also as Liz says we can’t continue using taxpayer’s money to bail these companies out. This leads to a larger question, that doesn’t have an easy answer. Are we better off continuing to bail out Fannie Mae and Freddie Mac or let them fail?
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