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Paul Kiesel
Paul Kiesel
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U.S. Considers Take Over of Fannie Mae and Freddie Mac

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In one of the scariest and most remarkable moments of this credit crisis in America senior Bush administration officials are considering plans to have the government take over either Fannie Mae or Freddie Mac OR both. As borrowers have been unable to meet their continuing obligations on their home loans defaults have been increasing, daily. While I have been blogging for the better part of one year, feeling a bit like “Chicken Little” the financial markets are finally coming to terms with the inevitable conclusion…”we are in deeper financial trouble than we have cared to admit”. Under the proposed plan the shares of Fannie and Freddie would be worth, potentially, nothing. Shares of Fannie Mae were trading as high as $70.57 in the last 52 weeks closed today at close to $13.00 a share; Freddie Mac’s shares have traded at a high of $67.20 and closed, on July 10th at an all time low of $8.00 per share. The government plan would put close to 5 trillion dollars in total debt in to the hands of a conservatorship to try and salvage the funds. It continues to amaze me that the government is acting in such a piece meal fashion without trying to insist the stakeholders sit down and negotiate an acceptable compromise that brings stability back to the financial markets and stability for homeowners. The dominos will continue to fall until a global compromise is struck. We have tried, through our class action cases to initiate a dialogue that can affect this result. We will continue to try but hope our voices will be heard before it’s to late.