October 13, 2008

Fannie and Freddie no Longer Run to Minimize Taxpayer Losses

MarketWatch reports of Fannie Mae and Freddie Mac getting new marching orders from the US government:
Regulators initially restricted Fannie and Freddie's growth when they seized control. To "promote stability" and lower mortgage costs to borrowers, Treasury Secretary Henry Paulson said the two companies would be allowed to "modestly increase'' their mortgage portfolios to as much as $1.7 trillion through the end of next year and said they would no longer be run "to maximize shareholder returns."
Since no returns of any kind are to be expected in a little while, the last sentence should actually be translated to a more accurate wording: They are no longer run to minimize shareholder losses. And "shareholder" now practically means the US government. Isn't that nice and reassuring. And a good way to promote the "free market".

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