In response to an article run by the Washington Post indicating that the Obama administration might opt to maintain an active role in the financial markets via oversight of government-controlled GSEs Fannie Mae and Freddie Mac, U.S. deputy secretary of the Treasury Neal Wolin has declared publicly that “the private sector…should be the dominant provider of mortgage credit.” He went on to accuse the Washington Post of “mischaracterizing a number of the core housing finance reform principals that the Obama administration laid out in its February report to Congress on the future of housing finance”[1].
While Wolin is certainly coming down hard on the Post, it doesn’t look to me like he actually denied the accusations. In his blog post, “Setting the Record Straight on Housing Finance Reform,” Wolin spends a great deal of time talking about what the administration “believes.” However, he stops short of saying the government is getting out of housing finance. He simply states that “any government support for housing finance will be targeted and limited”[2]. That doesn’t sound like out to me. And while Wolin does promise that Fannie and Freddie will be wound down “on a responsible timeline,” that timeline is, he admits, still being “weighed and analyzed.”
Do you think that Fannie Mae and Freddie Mac will ever be wound down completely?
In the Post article, the author reports on speculations that a favored approach by the administration “could even preserve Fannie Mae and Freddie Mac…although under different names and with significant new constraints”[3]. Do you think that this is likely?
Who thinks that these concerns are nothing more than “nit-picking” and everything is fine?
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[1] http://www.globest.com/news/1980_1980/washington/313177-1.html?ET=globest:e26944:482976a:&st=email
[2] http://www.treasury.gov/connect/blog/Pages/Setting-the-Record-Straight-on-Housing-Finance-Reform.aspx
[3] http://www.washingtonpost.com/business/economy/on-mortgage-rates-government-should-keep-significant-role-obama-says/2011/08/15/gIQA8wP0HJ_story.html
“the private sector…should be the dominant provider of mortgage credit.” Ah back to the 1920′s when interest rates IN THE PRIVATE SECTOR WERE 50%. Yeah, good idea.
According to Zero Hedge, countries outside of the U.S. dumped 74 billion dollars in U.S. Treasuries, most of it over the weekend:
“Over the weekend, we observed the perplexing sell off of $56 billion in US Treasurys courtesy of weekly disclosure in the Fed’s custodial account (source: H.4.1) and speculated if this may be due to an asset rotation, under duress or otherwise, out of bonds and into stocks, to prevent the collapse of the global ponzi (because when the BRICs tell the IMF to boost its bailout capacity you know it is global). We also proposed a far simpler theory: “the dreaded D-day in which foreign official and private investors finally start offloading their $2.7 trillion in Treasurys with impunity (although not with the element of surprise – China has made it abundantly clear it will sell its Treasury holdings, the only question is when), has finally arrived.” In hindsight the Occam’s Razor should have been applied. Little did we know 5 short days ago just how violent the reaction by China would be (both post and pre-facto) to the Senate decision to propose a law for all out trade warfare with China. Now we know – in the week ended October 12, a further $17.7 billion was “removed” from the Fed’s custodial Treasury account, meaning that someone, somewhere is very displeased with US paper, and, far more importantly, what it represents, and wants to make their displeasure heard loud and clear. (Source)
Undoubtedly, the Chinese and other countries have recently discovered that Italy and Greece, with smaller debt to income ratios than the United States, are less riskier and carry a higher rate of return. This is because, unlike the US, the Rothschild/Rockefeller bond rating agencies have trashed their country’s debt ratings, forcing them to pay a much higher interest rate than U.S. Treasuries. Hey, if you take the risk, you might as well earn the reward!