Fannie Mae and Freddie Mac…One Disaster After Another.

September 7, 2008 – 9:19 am – No Comment

Well it’s happening…the government is taking over Fannie Mae and Freddie Mac as soon as tomorrow…well this morning. These two mortgage lenders either back or actually hold HALF of the country’s mortgage debt…and they’re obviously in trouble. According to the AP, a government bailout of these two lenders could cost tax payers $25 billion…this is going to be a HUGE issue in the coming up election…hopefully.

According to consumer affairs website The Consumerist , this is how the bailout happened:

Henry Paulson, the US Treasury Secretary, told Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron that not only them, but their boards were fired.
Common shareholders will be almost completely done away while preferred shareholders, which are mostly banks, will be spared.

Most importantly, however, is that these two HUGE lenders will function as normal. Remember though, as a United States tax payer, you now own a portion of the homes backed by Fannie Mae and Freddie Mac. Lets hope things get better soon.