Friday, September 5, 2008

And Things Just Got Worse

From the New York Times:

WASHINGTON — Senior officials from the Bush administration and the Federal Reserve on Friday informed top executives of Fannie Mae and Freddie Mac, the mortgage finance giants, that the government was preparing to seize the two companies and place them in a conservatorship, officials and company executives briefed on the discussions said.

Aside from the added indebtedness this puts in the taxpayers' laps, if you happen to own mutual funds, through your IRA, 401k, investment plan, whatever, and any of those funds are holding Fannie Mae or Freddie Mac shares you are screwed. Expect those funds to take a hit come Monday. Essentially your tax burden will increase to pay off the debts that crashed your funds.

The U.S. government is bailing out the two agencies that combined hold or guarantee half the nation's mortgage debt - $12 trillion. Uh, that's trillion... with a "T".

1 comment:

Steve said...

I used to have trouble imagining an amount larger than our national debt. Freddie and Fannie have gotten me over this hump by a good 20 percent....