Look What We Just Bought

Fannie Mae/Freddie Mac have recently lost two thirds of their value because the houses securing the debt that they hold are worth, or will be worth, less that the amount of the mortgage. Their solvency is questionable.

Congress has just authorized these companies to reduce their hard reserves from 30% to 20%.

And your Federal Reserve is accepting bad mortgages in exchange for treasury bills.

That noise from the back of the bus was the passenger side rear wheel. And you, my prole friends with savings, are the ones who are being asked to pay the mechanic.