So what’s my thoughts on the bailout of Fannie Mae and Freddie Mac? Well let’s start with the fact the CEO’s of both companies are getting HUGE severance packages! What the heck? How can we be bailing out these companies and yet the people who ran them into the ground somehow have $9.3 million for Fannie Mae CEO Dan Mudd and $14.1 million for Richard Syron Freddie Mac CEO payouts?
Why do these people even deserve payouts? Honestly they should just be paying the company back rather than taking these huge payouts to LEAVE! They should be fired. What did they do to HELP the company? And the article says these two CEOs are “suffering” because their options and restricted stocks are worthless? HELLO! You realize that these two men drove their companies bankrupt and are still getting rewarded?
Why are we US taxpayers, giving money to pay their salaries? It’s ridiculous, outrageous, and stupid. They don’t deserve anything but being FIRED!
But back to the bailout of Fannie and Freddie. The government is stepping in and putting the companies under conservatorship. They are removing the asinine CEOs and board of directors from both companies. Okay I’m not sure the government is more qualified but they really can’t be worse right?
The government will then infuse billions of dollars to secure the mortgage securities. Basically giving the people who buy these mortgages some “guarantee” of returns. That people will default less. Basically it would keep mortgages afloat, instilling confidence that the government is behind us in this crisis. That the government is guaranteeing private profit.
What will this cost? Billions. The conservative estimate is $25 billion but it could be up to $100 billion to each company. Ouch. Granted we spend $10 billion/month on Iraq so I guess this isn’t that bad potentially.
What will happen to ordinary people? Economists are predicting a drop in mortgage rates. This could make refinancing more appealing to people who are in ARMs and potentially allow them to keep their homes.
I guess we’ll have to see what happens with this bailout. It’s an example of what would happen if the government was more involved in our lives. I don’t know if it will be for the better or worse. I’m sure others are waiting to see as well. This will likely impact our views on government run healthcare, retirement, etc. It will also affect our opinions about the amount the government should influence our lives.
2 responses so far ↓
1 Kristy // Sep 9, 2008 at 7:57 pm
The only reason the government bailed out Fannie and Freddie was to give the stock market a boost. Mortgage rates may drop and the housing bubble will last longer than its supposed to. And yes, there is a housing bubble in most parts of the country. People still cannot afford these houses as salaries have not kept up with the increase in housing prices. Not to mention that the lending standards have increased and you now need, get this 20% down in most cases. People still will not qualify for a mortgage. Our tax dollars are going right down the drain. This is what is going to happen when the government gets more involved in the day to day business of our lives.
2 LivingAlmostLarge // Sep 10, 2008 at 1:11 pm
Well not just a boost but to prevent foreign investors from fleeing. They are the one who were buying the securities.
I am not sure what the long term effects will be. I think we’ll have too wait it out and see.
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