Friday, July 11, 2008

The Debts of the Spenders: The Slow Death of Fannie and Freddie

Technically insolvent, the government sponsored enterprises of Fannie Mae and Freddie Mac are in deep trouble. Already on the hook for $billions in lost accounting revenue, Congressmen expect these 2 GSEs to prop up the ailing sub-prime sector. But at what cost? Traders reacted typically by dumping shares in each. Even rumors of a Federal Reserve bailout aren't as strong, with the combined debt loads of the two enough to turn the dollar firmly in the red and threaten America's AAA credit rating.