Freddie Mac And Fanny Mae And Government Takeovers–UPDATED
September 9, 2008 / 1:45 pm • By Dr. Melissa ClouthierI know shit about economics and my eyes glaze over when trying to figure out my own finances, but I do know this: The government bailing out anyone pisses me off. Last I checked, no one is bailing me out because I loaned someone else’s money to a dumbass who doesn’t pay his bills and everyone knows it, and then I need the money and wonder of wonders, he doesn’t pay me back. Some people should rent. Some people should buy smaller. Some people can have really awesome jobs but have a bad habit of living beyond their means. Some people will never be able to live in places like San Francisco or Key West or Manhattan’s upper west side. That’s life.
These lenders gave money to people who were overextended, who didn’t have the means, who were overbuying for the amount of money they made, who were buying homes when it was clear that the market was overvalued, etc. When we got the loan for our home, I crunched the numbers six different ways. There was one loan that was more appealing but it had an ARM. For like $50 more a month, though, we could have a fixed rate. Call me old-fashioned. And then there was the “stated income” loan. For a higher interest rate we could say that we made anything. What? That’s just crazy.
This is when I’d like a mafia-style government. Start breaking some fingers. Except, in this case, it’s the government’s stupid fault. What a mess.
Maxed Out Mama explains it in her super-smart technospeak. Doh! I reread the post twice and still don’t fully understand it, but smart people who played by the rules and did the right thing are being screwed and that pisses me off, too:
So the current shareholders will lose most of their value, but the bondholders will be protected. The taxpayers will be anteing up as needed, but the taxpayers get a stake in any further profits, so over time they should make out well. The bottom line is that the GSEs are the only game in town for mortgages, so they have an effective monopoly. That BS over covered bonds was just a feeble attempt to pretend that this all wasn’t happening.
And did you hear about the big fat buy-out packages the losers at the top of these institutions will get paid? Yeah, I know that’s how the world works, but that pisses me off, too. It’s like paying the quarterback of a winless team a bonus for leaving.
And I complained before about the Big Three in Detroit getting ready to latch on to the government teat.
Saving private industry is antithetical to the free market system. Not to mention, it’s just wrong. Like I said, I’m no economist. So if someone can explain to me why this is a good thing, have at it.
UPDATED:
What he says.
