All Your Mortgage are Belong to Us

Betcha didn’t see the Fannie Mae/Freddie Mac bailout coming, did you?  As predicted, we are now about to live through the recession while paying for someone else’s greed.

Based on the bleak grades given to the Hope Now Alliance [Who comes up with these names?  The Bush Administration sure knows how to color ideas, good or bad, with propaganda phrasing not seen since the Third Reich.  Godwin!] it was inevitable that the Feds would step in and offer a bailout in an attempt to stabilize the housing market, for which the two mortgage giants play a $5 trillion role.  In return for up to $200 billion in short-term financing the U.S. government will receive warrants representing 80% of ownership.  That’s warrants.  Not ownership.

If that’s the game that the Treasury Department is going to play then I want my warrants now, and as a new player in this housing market I demand having the ability to buy and sell my warrants that the government is foisting on me.  But I probably won’t get that opportunity.  I probably won’t even get a chance to determine whether or not the warrant price is reasonable (note to myself:  It probably won’t be).

Instead I’ll pay now through taxes to provide liquidity to the existing shareholder pool, then have to pay again if I want to actually buy shares on the open market at the probably inflated warrant price.

This whole mortgage thing just irks me.  It was obvious years ago that selling subprime mortgages could not be sustained yet risk managers, risk management software and federal regulators all failed to address the simplest of questions:  What happens should the bubble burst?  That they decided that such a scenario had minimal risk associated with it is an understatement.

We are now the proud owners of a huge fraction of the U.S. housing market.  May it serve us well.


4 Responses to All Your Mortgage are Belong to Us

  1. I’m getting really tired of being the person who does his research, makes the correct decisions (like NOT opting for a stupid ARM mortgage or buying more house than I can afford) and then paying for everyone else’s mistakes. This culture of punishing the successful needs to stop. Soon.

  2. Paul says:

    For reasons of physical safety, a written and practical test are both required before obtaining a driver’s license. One would think that for the financial safety of others, a written and practical test should be given to homeowners so that they know and understand what they are getting into.

    Too many homeowners are persuaded by unscrupulous profiteers in the real estate business. It used to be the Brooklyn Bridge and swampland in Florida; now it’s actual homes. Of course, the profiteering opportunity would not exist if there weren’t so many stupid and gullible people.

    And there’s the problem: The level of stupidity and gullibility has reached a critical mass in this country. Those of us who were sensible enough to manage the risks are once again shouldering the massive burden of those who weren’t.

    The automaker bailout is next.


  3. Jon Buckley says:

    You have no chance to survive make your time.

  4. Paul says:

    Or even more appropriately: “Somebody set us up to bomb”.


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