I got to thinking about the likely $400 billion cost of bailing out Fannie Mae and Freddie Mac by the Treasury, and where the money is coming from and where it is going. In a nutshell; Fannie and Freddie borrowed hundreds of billions from the Fed to purchase mortgage backed securities from banks, securities which now are largely worthless. So they have a big debt to the Fed they cannot pay.
So the Treasury issues bonds, the Fed monetizes them, and the revenue from them goes through Fannie and Freddie (with money taken out for their expenses of course) right back to....the Fed.
Wouldn't it be easier and cheaper simply to let Fannie and Freddie default on their debts and let the Fed eat this one? Maybe it would teach people there a lesson about ensuring adequate collateral for loans.
The Summer Solstice Audit
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This Friday is the summer solstice. It’s the longest day of the year.
Afterward, the days will start getting shorter. We’re big advocates of
embracing se...
8 hours ago
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