I think I am beginning to like this new Democratic Party that doesn't mill around pushing a socialist agenda but actually try to fix some things that are broken. First we have Senator Jim Webb finally understanding that regular Americans should trump environmental wackos when it comes to drilling and nuclear power. And now we have Sen. Christopher Dodd, (D-Conn.) perhaps saving Fannie Mae and Freddie Mac shareholders' bacon.
Dodd said his discussions with Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson, the regulators who oversee the firms and the two companies' CEOs convinced him they have more than adequate capital and that there was no need to even discuss failure or a bailout.
He also vowed quick passage of a long-debated housing bill to give greater oversight of the two companies, saying he expected it to passed and ready to be signed into law sometime next week.
"There is a sort of a panic going on," he said. "The facts don't warrant that reaction in my view. Fannie Mae and Freddie Mac were never bottom feeders in the residential mortgage markets. People ought to feel confident about them."
He pretty much stood up and quelled the fear of a government takeover sending FRE and FNM to zero. He seems to have actually worked with Paulson and Bernanke to hammer out a plan even though they are so-called "Bush" people. This all happened while Bush seemed to dither and hem and haw and almost killed the stocks in the process.
The New York Times says that senior members of the Bush administration are considering a takeover of Freddie and Fannie that would leave their shares "worth little or nothing," and where taxpayers would pay "any losses on mortgages they own or guarantee."
Yup, this death to FRE and FNA shareholders was purposed first instead of just letting the companies go to the discount window if they need some extra cashola. I mean they let Bear Stearns do it why not Government Sponsored Home Lending companies that represent several trillion dollars in home loans.
I think whoever mentioned receivership on the Bush team needs to resign because they can't read a financial statement correctly. I think it might be time to go long these stocks because they really are money machines if they are run properly. They seem to be actually backstopped by the government despite the Bush Administration's screw-ups. Maybe wait for the reforms to kick in before it is time to pull the trigger.
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