SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Residential Real Estate Crash Index
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
From: Giordano Bruno3/1/2008 8:39:42 AM
of 306849
 
Abelson snippet on Fannie and Freddie

A nicely wrought piece on the two in Friday's Wall Street Journal points out that the Office of Federal Housing Enterprise Oversight, or Ofheo for short, which awoke from its slumbers a few years back and aggressively pushed Fannie and Freddie to mend their feckless ways, reckons that the book of business (loans carried on its balance sheet and mortgages it has guaranteed) is a cool 81 times Fannie's net worth and 167 times Freddie's.

Even using book value as measured by the somewhat more forgiving usual accounting standards, Fannie is leveraged 20-to-1 and Freddie 30-to-1. Any massive ballooning of loans such as envisioned by the bail-out brigade would, of course, kite those already formidable ratios (two and three times greater than those of the 20 largest U.S. banks) and force the two to scrape up copious amounts of capital.

If the pols panting to get Fannie and Freddie to act as a firewall against foreclosure and rescue a million desperate homeowners -- all of whom and spouses presumably vote -- get their way, the result, we regret to say, will not halt foreclosures or ease the plight of besieged homeowners. What such efforts are more likely to achieve is to significantly worsen the housing imbroglio by adding Fannie and Freddie to the casualty list.

online.barrons.com
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News