Good Morning Middle America, your King of Simple News is on the air.
As the self described “hardest working ever” and consequently the “lowest rated ever” Congress, has passed the Fannie (Federal National Mortgage Assn.) and Freddie (Federal Home Loan Mortgage Corp.) bailout, we need to take a closer look at just exactly what that little piece of hurried legislation has accomplished.
First, it is important to understand that Freddie and Fannie hold the mortgages for about half of all homes in America. Second, they are both private corporations that are traded on the New York Stock Exchange, not government entities; but none the less, are tools of our mathematically challenged government leadership.
Freddie and Fannie take loans off the banks hands in order to pass on the risk and to enable the banks to constantly make more loans and collect more fees without the bothersome issue of collection, which has become a problem of some magnitude.
So why would the public buy stocks in companies such as Freddie and Fannie who I have pointed out for some years to be extremely risky? The answer to that question was always evident; should there ever be a failure, the federal government would reach deep into the taxpayers’ pockets and bail out the stockholders. The proof is in the pudding.
Exactly how bad is our banking and economic system when the feds bailout private corporations to the tune of billions and begin to seize banks on a regular basis? I think that answer is self evident….it’s horrific.
To better understand just how horrific, in that piece of bailout legislation was another provision that raised the ceiling on the National Debt some $800 BILLION!
Let’s also put that last figure into perspective. For the first 204 years of this nation’s existence, until 1980, our total accumulated National Debt was approximately $850 Billion. Last week our Congress raised the ceiling by nearly the total accumulation of the first 204 years.