Feds to buyup Mae and Mac on the taxpayors dime

rcrosby

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Where will this end?

Bailout


By Brendan Murray and Dawn Kopecki

July 13 (Bloomberg) -- Treasury Secretary Henry Paulson sought authority from Congress to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac, aiming to stem the collapse of confidence in the largest sources of U.S. mortgage financing.

Paulson proposed that Congress enact legislation giving the Treasury temporary authority to buy equity ``if needed'' in the firms, and to increase their lines of credit with the department from $2.25 billion each. The Federal Reserve authorized the companies to borrow directly from the New York Fed, in a step that could provide funding before the bill is passed.
 



BelchFire

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I understand their reasoning; it'll look like they're "doing something" to rescue the credit crisis. However, all this will do is make the situation worse in the long run. I say let them fail, and let what goes around come around. This is a prime example of what supply and demand is all about. The market couldn't sustain sub prime rates, but since other banks were "supplying" such rates, all banks looked beyond that and decided to supply what the market wanted. And now it's going to hurt. The big problem here is that it's not going to hurt the people who made these poor decisions but all taxpayers as a hole.

Stop this crap.
 

rcrosby

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Hey Belch not to be argumenative with your post but banks have long since departed from functioning on a supply and demand curve. In 1913 the Federal Reserve Act established central control and planning of the banking industry. The Federal Reserve has created an artificial price control for interest rates and lending. The fault of this mess is the idea of centralized planning AKA socialism that has been rampant in this country since at least 1913 and full bore since the New Deal. We are currently living in a fully socialized country. What I hope is that people don't get confused that this in some way is capitialism or a free market issue and demand more controls, regulation and planning. I am probably butchering this quote but I don't have time to look it up, Ron Paul, "How do we blame a free market? We haven't tried that yet."
 

BelchFire

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I certainly won't argue with being corrected on banking issues. A short jaunt through my checking account will tell you all you need to know about me and banking. I thought that each bank was at liberty to offer whatever interest rates they wanted to. If not, why aren't all banks selling the same rate (right down to the hundredth decimal)?
 

rcrosby

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Here is just a brief primer on how the Federal Reserve attempts to centrally plan and control our economy and banking functions. Federal Reserve Functions Rather than the free market properly functioning to set interest rates through savings and investments rates we artfically use the Federal Reserve. Think of the quote John McCain used last week about Freddie Mac and Fannie Mae being so vital to the economy because they have helped millions own their own homes. This lies to the very heart of the problem. To say that Mac and Mae have helped people own homes is living in a fairy tale. That is like saying my Mastercard has helped me to raise my standard of living. It has only helped to create a nation of debt slaves that will likely never own our home and if we ever do we will still be taxed to the max to pay for an education system that was designed and is doing a good job of failing.
 

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