The story is breathtaking. Staggering. Dumbfounding. But there it is - the biggest nationalization in history. Freddie and Fannie finance 3 out of 4 new mortgages. And now, the mortgage industry depends neither on willing buyers and sellers…nor on willing lenders and borrowers…but on the U.S. government. The Land of the Free has put its housing under the control of the state! Yes, there is still plenty of room for private initiative and private decision-making. But, ultimately, millions of Americans now depend on the U.S. government for the roofs over their heads.
We checked the U.S. Constitution for clarification. We were looking for a provision stating that the 'U.S. Federal Government shall enter the mortgage finance business and use taxpayers' money to rescue irresponsible lenders and dimwit homeowners from their own mistakes.' It wasn't there. But so what? If there is anything the government can't do, we have yet to find it.
The FED is desperately trying to avoid the collapse of Fannie/Freddie with guarantees of non-existent money.
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