The Fed and the Comptroller of the Currency want to know how Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM) are doing financially. No one seems to know for sure. That means the price of a bail-out of the companies is up in the air
According to The New York Times, "The financial condition of Fannie and Freddie is of keen interest to members of Congress, some of whom have expressed concern about approving a plan without a clearer understanding of the value of the possible losses."
The questions out of Congress are fair enough. The fact that the two firms do not already have answers to the questions is disturbing.
It is hard to imagine how Fannie Mae and Freddie Mac could have gotten so off track that they cannot give an adequate assessment of their own books. Perhaps if they had know more about their balance sheets and had implemented better forecasting and risk controls, the current mess would not be nearly as dire.
When no one knows how bad things are, they usually get worse.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
7-22-2008 @ 10:09AM
william lindblad said...
This is a hot one - the government is investigating themselves. For anyone that is interested, go put OFHEO in search, open the site and read the mission statement. This is the agency that oversees the two F's.
Makes good reading and I did this over a month ago.
Seems to me that if directives were followed there is virtually no way that these two entities could be in any substantial trouble. As it stands I know that I posted a statement calling for all of the leadership involved to have their butts in front of a Congressional committee to explain WHY there is a problem. I may get my wish. Unless all have good explanations I think that everyone involved should get fired - less any big perks that generally go along with this type of bad management.
7-22-2008 @ 12:42PM
L. Fleming said...
In interesting piece of information would be a list of the compensation packages, bonuses and fees paid to the managers of the institutions involved in this mess during the past two years. This should include not only the executives of Fannie and Freddie, but of all of the major banks and mortgage companies which skimmed and scammed borrowers and investors. As with the S&L crisis of the 80s, this money didn't just disappear it was simply "reallocated" to the fat cats who will remain fat as taxpayers pick up the tab. No one will go to jail and no one will be fined or asked to make restitution. What a wonderful world!