Tags: paul | volcker | fannie | freddie

Volcker: We Can't Save Fannie, Freddie so Just Get Rid of Them

By    |   Wednesday, 11 Aug 2010 01:37 PM

Many experts have criticized the new financial reform law for leaving out Fannie Mae and Freddie Mac. Add White House adviser Paul Volcker to the list.

The two mortgage agencies have become virtual wards of the state after melting down during the financial crisis. It turns out that some of those subprime mortgages they guaranteed weren’t really triple-A quality after all.

Estimates for the total cost of bailing out Fannie and Freddie run as high as $1 trillion.

And what does Volcker think?

“We are going to have to reconstruct the whole mortgage market,” the ex-Fed chairman told Smart Money.

“The mortgage market now is almost a wholly owned subsidiary of the U.S. government.”

That’s because Fannie, Freddie and other government agencies guarantee or own more than 90 percent of the mortgages originated since the financial crisis.

“Not much exists without the government running it. I don’t think that’s what we want,” Volcker said.

“It’s clear Fannie Mae and Freddie Mac need to go. We don’t need these hybrid institutions. You don’t know whether they should be responsible to the government or to stockholders. It’s an unfortunate invention.”

Meanwhile, speculators are trying to strike it rich on Fannie shares, whose trading volume has recently tripled that of Goldman Sachs, even though Fannie is a penny stock.

“The volumes are astonishing,” Bose George, a financial analyst at Keefe Bruyette & Woods, told The New York Times. “It’s like a casino.”

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
Many experts have criticized the new financial reform law for leaving out Fannie Mae and Freddie Mac. Add White House adviser Paul Volcker to the list. The two mortgage agencies have become virtual wards of the state after melting down during the financial crisis. It turns...
paul,volcker,fannie,freddie
239
2010-37-11
Wednesday, 11 Aug 2010 01:37 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved