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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: michael97123 who wrote (397662)	7/10/2008 12:41:56 PM
From: tejek	Read Replies (1) \| Respond to of 1576265

What happens to housing if they fail--existing mortgages, new mortgages? Can they be replaced rather than rescued by private firms to direct govt involvement? This is way far away from my area of expertise. FNM and FRE provide secondary financing to banks. Banks sell their mortgages to FRE and FNM. By doing that, the capital of banks gets replenished and they can provide more mortgage loans to Americans. With the subprime debacle, FRE and FNM bought a lot of these crap loans that now are in default. Now their capital has been depleted and they can't buy mortgages from banks, and that is freezing up the lending business in this country. Look.....there is no excuse for what the housing industry.....builders, real estate agents, mortgage brokers, banks,etc.......did over the past 5 years. Its a disgrace......they violated almost every important tenet of the business and the country is paying for their hubris. However, like I told John, you don't throw away the baby aka FNM and FRE with the wash. They are the muscle behind the housing industry and you always try to preserve muscle whenever you can at almost any cost. Let the banks fail....let homebuilders fail.....let people go into foreclosure......but you don't let FNM and FRE go down. Its just plain stupid!