Fannie Mae

WASHINGTON - If everything breaks right, the hit to taxpayers from a broadening government rescue of the nation's tottering financial markets could be minimal. But if it doesn't, there's a big bill waiting for us all. "These measures will require us to put a significant amount of taxpayer dollars on the line," President Bush acknowledged yesterday as his administration continued to work on a multipronged plan to restore confidence in financial markets. "But I'm convinced that this bold approach will cost American families far less than the alternative."

30-year mortgages lowest since February WASHINGTON : Rates on 30-year mortgages dropped sharply again this week, falling to the lowest level in seven months, as rates continue to decline after the government's takeover of mortgage giants Fannie Mae and Freddie Mac. Freddie Mac reported yesterday that its nationwide survey found 30-year, fixed-rate mortgages declined to 5.78 percent this week, down from 5.93 percent last week. It was the fifth consecutive weekly decline and pushed the 30-year mortgage to the lowest level since it stood at 5.72 percent the week of Feb. 14. The decreases have accelerated over the past two weeks since the government announced on Sept.

'Significant' charge at Glen Burnie Bancorp Glen Burnie Bancorp, parent company of the Bank of Glen Burnie, reported yesterday that it would record a "significant" charge against earnings during the third quarter because of losses from investments in Fannie Mae and Freddie Mac, according to a regulatory filing. The company said it held preferred stock in Fannie Mae and Freddie Mac that were AAA-rated at the time of purchase but sank in value from $3 million at the end of June to $163,000 after the federal government took control of the nation's two largest mortgage finance companies last week.

Privatization proves taxing for taxpayers The collapse of Fannie Mae and Freddie Mac is an example of a short-term solution resulting in a long-term failure, and of the victory of ideology over reasoned analysis ("U.S. takes over mortgage giants," Sept. 8). Fannie Mae, formerly a governmental agency, was sold to private investors in 1968. Freddie Mac was privatized in 1989, and both privatizations were rooted in the ideology that private enterprise always does a more efficient and effective job than the federal government, and that less governmental regulation always is better than more regulation.

Yesterday's favorable reaction of markets to the federal takeover of Fannie Mae and Freddie Mac should not be interpreted as a sign that the nation's real estate woes are over or that financial institutions have only smooth sailing ahead. It's more like a collective sigh of relief - a government bailout keeps the system afloat - but it comes at a steep price for taxpayers and investors. Make no mistake, it was the right move. With so many trillions of dollars in mortgages at stake, Treasury Secretary Henry M. Paulson Jr. could not allow matters to get worse, nor could he simply bail out the quasi-public corporations without also assuming primary ownership.

The government bailed out mortgage giants Fannie Mae and Freddie Mac yesterday, belying dozens of Fannie and Freddie executives who said year after year that such a thing would never - could never - happen. "The U.S. government does not guarantee, directly or indirectly, our securities or other obligations," Fannie said in its last annual report. "We are a stockholder-owned organization, and our business is self-sustaining and funded exclusively with private capital." The companies are about to receive what we can conservatively estimate will be tens of billions in taxpayer dollars.

The U.S. government announced yesterday that it was taking control of mortgage giants Fannie Mae and Freddie Mac, saying the companies' weakened finances had made it impossible for them to carry out their missions of supporting the struggling housing market. At a news conference in Washington, Treasury Secretary Henry M. Paulson Jr. laid out a plan to place the companies into conservatorship, under which the government will direct their operations from now on. The Treasury will make capital injections into the companies, up to $100 billion each over time, and lend them money as needed.

A credit crunch that has choked off mortgage funding for millions of Americans, forced thousands of homeowners into foreclosure and placed hundreds of banks and investment firms in jeopardy appears unlikely to ease until a continuing crisis at Fannie Mae and Freddie Mac is resolved. An early resolution of the crisis is an urgent priority. The two quasi-public corporations holding or insuring roughly half of all the home mortgages in the nation have reported losses in the billions stemming from the subprime mortgage crisis and the subsequent credit crunch and housing slump.

Few chapters in the annals of corporate welfare are as impressive as the one on Fannie Mae, the troubled mortgage concern. Oil companies rely on cut-rate government drilling leases to tilt things their way. Sports teams use stadiums built with taxpayer dollars. Big Sugar gets federal trade walls against competition. But Fannie Mae is the only Fortune 100 company that used to be a federal agency. Imagine if the Federal Reserve decided to sell stock to the public. You might get in on that action, right?