The blow up here was expected. Let the feds go back and recover some of the huge severance package paid to the former CEO of Fannie Mae, Franklin Raines. This crisis was built up under his direct leadership and he walked out in 2006 taking with tens of millions in severance pay and with a pension plan that pays him over $300K a year.

Now the feds want the taxpayers to bail out these bums??? If China owns $340 Billion of Fannie Mae, let China take the hit for what it owes, and let the stock and bond holders take the rest. Then we sell whatever good assets are left and start over.

Only next time, the feds DO THEIR DAMN JOB and regulate the business practices of companies like Countrywide and Fannie Mae. No more mortgaes without income verification. No more teaser rates. No more adjustable ARMS. Go back to basics and keep the MBA Cowboys out of the picture.

The Fed is not controlled by the USG, it just has a connective name. And now Fannie and Freddia, which ARE Federally controlled, are treated as a natural born lending institution. Bait and Switch?
http://johnmccarthy90066.tripod.com/id545.html

PPT - Paulson, Bernanke, et al.... Just Picked Investors Pockets Clean in Weekend Robbery Heist!

Those Goldman Sachs ex Presidents know how to manipulate public!

PPT - Paulson, Bernanke, et all... just Picked Investors Pockets Clean!

As ex Goldman Sachs does to public Daily!

David from Texas says - "they are using MY TAX money to bail out these irresponsible lenders and housedebtors really chaps my hide.

This is not fair. The government needs to STAY OUT of the market."

David, respectfully, you are an idiot. You probably voted for the Republican president and an R congressman who contributed to this mess. I too blame the irresponsible homebuyers and lenders but its way too late for that right now. If the government didnt do this, it would be YOUR bank account, YOUR 401K plan, YOUR rent and food, that would take the hit. You dont know what happens if the Gov lets fannie and freddie go??

The real problem is that everybody in this country keeps buying cheap chinese goods instead of supporting US industry and US workers, the Chinese OWN us now, and its going to take decades to dig out of this mess, including - as you correctly point out - the deficit.

I do not have a Fannie/Freddie mortgage. I purchased the home I first rented for 13 years on a contract from my former landlord. I made certain the payments and price were affordable for me, and were no higher than my rent had been.

Why am I now responsible for bailing out he banking industry and the mortgage industry? I didn't invest in sub-prime mortgages. I didn't buy millions of dollars worth of property I couldn't pay for. Why the h*ll is this my problem?

I dont like this either - but the consequences if the govt did not do this would be our bank accounts, our retirement, our rising costs - all taking an immediate hit - and those irresponsible home buyers and banks still go scott-free. Why is no one one placing blame where it belongs - the incumbent president? I bet most of you bloggers who bemoan "get the Gov't out of my life" seem to disassociate when confronted with the fact that "The Government" for the past 8 years has been a REPUBLICAN.
Secondly, lets spread the blame where blame is due - most Americans are all too happy to buy cheap Chinese goods, rather than paying more for "Made In USA." As a result of selfishness and greed - we are talking us in the middle class here - now the Chinese own us. Foreign debtholders virtually own freddie and fannie. There needs to be a fundamental change in this "spend spend spend" culture - and I am not talking about "THE GOVERNMENT" I am talking about the majority of American people - that would be us.

i disagree that paulson took this job on as a challenge. on the contrary, he got a huge tax break on his ~$750mm of goldman stock by taking the post. things were great when he started, and i bet he thot he'd just cruise through enjoying trips to china! Larry Fink has it right, Greenspan and regulators were not only asleep at the wheel but urging home purchases and consumption through ARM's, cash-out refi's and home equity loans. The Fed is also responsible for keeping rates too low for too long and creating the amount of liquidity and leverage that allowed this issue to grow to such epic proportions. there is guilt at every level of the chain, from the borrower borrowing beyond his means to the mortgage banker who made the loan to wall street which packaged it to the investor who blindly relied on the erroneous rating the s&p+moody's etc put on it. everyone in that chain acted like greedy bastards, either due to nature or temptation...thats what the regulators were meant to watch out for.

unfortunately the scope of this problem is so massive that we will all have to help in the bailout. most of the participants have suffered tremendous losses as businesses have collapsed and jobs and equity have been wiped out. the problem i have with the current proposal is the same i've had with the $400B of equity privately raised and mostly lost by other financial institutions, until you put a floor on housing this is just money down the drain. if that amount of equity was applied at the bottom of the food chain ,the individual borrower, it would recapitalize everything up the chain and allow the financial system to function again, hopefully with much better oversight. as distasteful as that is from a moral hazard approach, it is the fastest, most efficient way of getting out of this mess. if we have to bail, lets bail with a bucket and not seive.

That 80 million dollar capital gains tax break Goldman´s Paulson got when he became Secretary of the Treasury was sure worth it.--- For it, Sec. Paulson´s bailout pocket bazooka will bless FME and FDE with his own brand of holy water. Sodom and Gamorrah are saved, and the tax payer got screwed for 800 billion plus and counting. Great land this America,----- and now everyone can vote between catastrophe or disaster come Nov., that´s democracy, american style.

Why do you do that? "The government to wipe out shareholders by Sunday." Does it give you some pleasure to see the stock market crash? Does it make you happy to start a panic when you write such a deceiving headline?
I am a product of the American Dream come true. I was born in poverty and worked my butt off to become respectable and successful. I have (had) a nice retirement fund that we invested in the stock market for our income. Do you know that every time you help the market crash you hurt the middle-class hard working American who fought for and helped build this country.
Everything everyone is saying about the government bail-out is true BUT the government goofed big time with Freddie and Fannie!!! Let them fix it so all the people like us don't go broke and have to go to work to suvive at 73 years of
age. I think all the people who are saying "Let them go under," are young people who do not have to depend on the stock market for their income and survival - there are many, many of us out there.

Isn't this all about keeping the home prices inflated so that local counties and fed can get more taxes out of the people who buy / already bought them ? Why should tax payers like me, who have been renting to avoid paying higher prices for houses that are worth less, pay the price to keep it that way ? It seems totally ridiculous. It can happen only in USA.

The sad thing is the common person doesnt even know what is going on. I just recently started reading the business section and have learned about the banks and how the bundling of mortgages was going on without anyone being responsible. If you talk to the regular joe shmoe they have no clue what is really going on they just blame Bush for all this. They have know real clue about the banks and all the foreign investors that bought this mortgages. If they did I can gurantee there wouldnt be any bailout and people would be held accountable.

This crisis was not caused by the Republicans alone. It is true that deregulation started under Reagan, but it mushroomed under Clinton, and Bush did nothing to stop the abuses. He did nothing because it allowed Bush to tell the American people that more people owned homes under him than under any previous President. What rubbish! He forgot the difference between actually owning a home and owing a mortgage.

As for who takes the hit, well, it should be the investors first, including China and her $340 Billion, then the common stock holders, then the preferred stock holders, then the bond holders. If that then bankrupts Fannie and Freddie, oh well! At least we start we a clean slate and good assets.

If the feds think that the same MBA who caused this crisis can now fix it, well, trust me, that just won't happen this time. There are no more shells to hide the pea under! The game is over. No more "Off balance sheet transaction", no more "derivative securities" markets built on air and bad investments, no more CEO bonuses for playing games with the books. Transparency will rule for the next ten years, and boy do we need it!

When will the American Taxpayer wake-up and realize that "The Federal Government" isn't some separate organization that we humbly ask for help, but it is us and that the greatly over paid Politicians (pay plus benefits that we don't get) are our employees. So why shouldn't a bailout to this magnitude be voted on by the taxpayers. Also the top executives should be made accountable and definitely made to payback some of their $Millions in pay and no severance pay, they ripped off enough. As you probably can tell this really pisses me off as I was well off and paid $100,000's in taxes over the years until 9/11 and lost everything in the few days of stock market crash, but wasn't concerned until health problems took their toll and now I'm living on $637 a month SSI in a 1974 trailer, but did the our Government bail those like me out for our losses (which were by no fault of ours) NO. We need to find ways of making our employees (our politicians) more accountable to us. By the same token we should find ways for more accountability for all the Foreign aid that our tax monies are paying for.

This is the kind of government we have to get rid of. They allowed the lenders to reap huge profits for years on an expanding economy knowing that it had to come down to this sooner or later. It is the same story, these guys who call themselves our leaders dropped the ball on 9/11 as well. Guess what, if you or I do this poor of a job we get fired. There is no big severance package and a new job waiting somewhere else. It is called taxation without representation.

Our government set the stage for this mortgage mess, and now our government wants us to go along with the view that the fault belongs to dishonest borrowers and dishonest lenders. The way I see it, the interveining requirement of our government that lenders loosen their qualifications for loans is about the same as our leaving our purse or billfold on the sidewalk and then expecting that all passerbys will be honest. We would not do that, yet the people we elect to represent us do, and then they come up with solutions that make the situation worse. We need to identify those responsible, and get them out of office- the sooner the better.

Bert. wow! the same thing is about to happen to me and it hurts. You can't hold these guys responsible because they are the ones who make the rules. We need term limits, public financing for campaigns and fiscal oversight that is not in the control of the same people who have the fiscal responsibilities.

Im knew to this whole business culture. So I guess in a way I can see it from the outside. When 401k first came out I told everyone its like gambling and the money you invested is dependent on the company investing your money. They will still make money even if you lose. Might not be as much if the investment makes money but they will still make money(talking about the top executives). I didnt do the 401K cause I said I will save myself pay everything cash except for the house I bought before the housing boom and houses got wayover inflated. I was responsible like our older generation was. The problem is people are so insecure of themselves they think money will bring happiness or give them status. Everyone has to have a new car, a new this a new that. So they invested in 401K thinking Im going to have alot of money when I retire. So the people who are for the bailout know if it doesnt happen alot of people would be affected due the investment companys are invested in the mortgage business. The people who arent overly invested in 401K wouldnt be affected as much. So I guess it depends on what side you are on whether your for the bailout or not. As for the blame its the banks,the people who knew they couldnt really afford the house and didnt think that If my wife or I lost my job can we still pay the mortgage. The goverment for no oversight Either they really didnt look into the future our they where making money also on this mortgages. I saw this coming many years before it happened. It was just common sense. A regular house going for 500,000 how do you afford that. On top of that property tax. Also Im not for either party I dont think either party cares about us, just all talk. In the last 15 yrs I havent seen anything done just bickering and nothing accomplished and we have had democrat and republican controlled congress.

The bedrock of the financial system, a conservative investor who buys instruments like muni bonds, mortgage paper, and the preferred stocks of trusted names like citi, boa, fannie and freddie, is being totally shit on. Why aren't the subversive, greedy low lifes who have so dramatically abused their responsibilties to investors being jailed and forced to give up their fraudulently obtained fortunes? Those who are elected or appointed to guard the public from unsafe food, drugs, and consumer products also deserve to be held up to scorn and jailed for the absolute failure to protect us from financial products that are proving to be the asbestos of our banking system.
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Criminals are looting are nation's wealth. They are not Republicans or Democrats acting alone. The two major parties are nothing other than criminal factions. Almost every single person working on Wall Street needs to be put in jail. I used to be against the death penalty, then Paulsen and crew came along, and I've had to readjust my opinion about how problems need to be solved. If you own a house, whether you own it outright or not, right a letter to the the lowly tenants you look down on, and thank them for saving your lame ......