Bradley in DC
Member
- Joined
- May 18, 2007
- Messages
- 12,279
http://online.wsj.com/article/SB121607820954752561.html?mod=djemEditorialPage
End the Mortgage Duopoly
By GERALD P. O'DRISCOLL JR.
July 15, 2008; Page A19
Despite last week's protestations by Treasury Secretary Hank Paulson and Federal Reserve Chief Ben Bernanke, markets knew that Fannie Mae and Freddie Mac were not well capitalized.
Markets also anticipated the weekend bailout announcement by bidding down the share prices of the two mortgage giants, and also bidding up the prices of their debt (driving down their interest rates). That was a bet that the forthcoming bailout would result in a dilution of shareholder value, and protection for the bondholders.
[End the Mortgage Duopoly]
Chad Crowe
Yields on Treasuries rose, as the government's balance sheet was expected to expand by whatever the net liabilities of these two companies might be (less, presumably, than their $5.3 trillion gross liabilities). The dollar tumbled in anticipation of more deficits, and more inflation to pay for all this.
The focus must now be on the way forward. This should entail putting both institutions on a sound financial footing, and never again allowing them to become a drain on the taxpayer and a threat to financial stability. . .
End the Mortgage Duopoly
By GERALD P. O'DRISCOLL JR.
July 15, 2008; Page A19
Despite last week's protestations by Treasury Secretary Hank Paulson and Federal Reserve Chief Ben Bernanke, markets knew that Fannie Mae and Freddie Mac were not well capitalized.
Markets also anticipated the weekend bailout announcement by bidding down the share prices of the two mortgage giants, and also bidding up the prices of their debt (driving down their interest rates). That was a bet that the forthcoming bailout would result in a dilution of shareholder value, and protection for the bondholders.
[End the Mortgage Duopoly]
Chad Crowe
Yields on Treasuries rose, as the government's balance sheet was expected to expand by whatever the net liabilities of these two companies might be (less, presumably, than their $5.3 trillion gross liabilities). The dollar tumbled in anticipation of more deficits, and more inflation to pay for all this.
The focus must now be on the way forward. This should entail putting both institutions on a sound financial footing, and never again allowing them to become a drain on the taxpayer and a threat to financial stability. . .
