The Fannie and Freddie Stakes Are High
bloomberg.com
bloomberg.com
It seems the only reason the government should give up ~$28B in revenue PER YEAR for literally nothing is to put the government in more debt and give free money to Bill Ackman.
I assume the only reason it hasn't happened yet is that Trump is still figuring out how to tank Fannie/Freddie shares beforehand so he and his cronies can buy them up like they did with the on-again off-again tariff threats.
It's both parties--and it's been this way since the end of the cold war. There's no longer a need to say we're better than the alternative. The dems cancelled student debt--a gift to both debtors in the investor class. Harris's campaign trail housing push was also a gift to the investor class. And the Fed printed $9T while dems were in office.
Of course the big caveat is that once private, the government needs to ensure another bailout is not possible.
Ackman is not getting screwed.
When the government essentially nationalized Fannie and Freddy, they made it clear that the stock in those companies was worthless.
Ackman bought it, thinking his billions would be enough to lobby the government into zeroing out their share and handing him $600B.
He's not getting screwed if they say, "you bought worthless stock, and it's still worthless, sorry."
Sure he is. He's just doing it to himself.
If anything, they should be dissolved entirely.
Releasing them will create a privatized monopoly and further inflate housing prices. This would be really great news for several dozen ultra wealthy folks, moderately good news for existing home owners, and bad for anyone else.
Low rates do not lower home prices-- they just let people borrow more and inflate home prices. One possibility is that artificially low rates rise to market rates...and home prices fall commensurately, or rise less to accomodate.
The big players have been trying everything to unload bitcoin onto the public - floating the idea of government having a "strategic bitcoin reserve" and other nonsense. Now this?
On a related note, the US housing market is overdue for price collapse part II. I'm very interested to understand what's holding them up so high - increasing even as interest rates rise. How? Is it just all that Covid money still sloshing around the economy?
Mostly lack of liquidity. Unless forced, very few people who are sitting on a 2% mortgage are going to sell and take on another mortgage at 8%. Supply has gone up a little since the Covid lows but it still nowhere near where it was during the last collapse in 2007/2008 when sellers were legion.
It has zero interest in homes going down in value (not only from a voting perspective, but also from a financial perspective).
The thing that's going to give (long term) is not going to be nominal home prices.
Real home prices declines are plausible.
In real terms, yes.
In nominal terms, no.
The dollar will get tanked, so that asset prices fall much less than they otherwise would.
Or maybe this is a different issue that im not quite grasping.
Add it to the list that includes social security funding, population decline, poor infrastructure, attitudes towards vaccines and the national debt. It's just how we roll
Loans are tied to a term, borrowers can resolve their own liquidity issues, so it’s not crazy to give underwater loans time and breathing room in rate to work out without forcing a collapse. Simply broaden underwriting requirements for new loans.
Time, value, and risk, right?