Tuesday, August 19, 2008

The Endgame Nears For Fannie and Freddie

"The almost inevitable government recapitalization of Fannie Mae and Freddie Mac will likely wipe out investors—and management."

Excellent article detailing the shameful state of disrepair that Fannie and Freddie find themselves in. For years there have been calls for a tougher regulator for these entities whose mortgage securities provide liquidity to the market and have what most believe to be an implicit guarantee by the government, yet these calls went unanswered. Most likely it is because both were spreading the wealth on capital hill.

This latest "housing bill" was a smokescreen for the coming bailout of Fannie and Freddie, an attempt to cover past mistakes by congress.

This doesn't mean the market is going to hell in a handbasket - the fact that this article and many like it are available for anyone to read is evidence that this might be already factored into the market.

Its not going to be an easy road, but those who choose to travel it should be rewarded.....it just might take a little time.

Scott Dauenhauer, CFP, MSFP, AIF