Steve makes a great point: The Moral Hazard has been realized. The FNM and FRE CEOs and Board of Directors should have to give all of the salaries and bonuses back to the tax payers. Opportunistic Crooks.

The housing market doesn’t bottom until 35% of area’s per capita median income is enough to cover the yearly mortgage cost on an 80% mortgage on the area’s median housing price.

We may have a way to go,
j

It is very hard to imagine that it has come to this because of greed and stupidity. The moral hazard is real and if not corrected, will lead to a great financial catastrophe.

A

Pauson seemed to be shooting straight, but he dodged the issues of politics and timing – doing it over a weekend, no communication about it. Typical federal government – closed and making sure that the thinngs/people they think are important are taken care of.

I started investing in FNM/FRE in July before they locked down the short selling.. I was trying to follow the bouncing ball, I had an understanding there was high risk. That said, there was more commentary they were capitalized and had the potential to make it than there were saying the feds would take over. And it seems there were options for taking over short of conservatorship which could have provided the needed capital backstop without crushing the preffered and especially common stock.

I guess at this stage, I gotta get smart enough to decide whether there is any reason that they might come back or just to sell the remaining as a loss and flip the fed a big bird of thanks.

It does seem, as Paulson kind of alluded to, there is still potential for our economy to recover, housing included, and if so, these are still basically the same companies they have been, at least for another year until they are forced to start getting smaller or until McCain or Obama and the next Congress come up with an even more brilliant plan.