This makes me VERY angry! We CANNOT bail them out! FannieMae and FreddieMac are just like the Federal Reserve in that they are PRIVATE Organizations that regulate US POLICY! LET THEM TANK! $5 TRILLION in bad debt is NOT the responsibility of the US TAX PAYER!!! Let them tank. If there were ever something for you to take a stand on, THIS IS IT!
Contact your Representatives and Senators and let them know the American people will no longer bail out private banking firms! Let them Tank! Let the natural order of business work! This socialistic monetary policy within a capitalistic environment is DESTROYING our economy by raping the American people of their hard earned money!
Say NO TO BAILING OUT ANY PRIVATE FIRMS!
whereabouts
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CBS News

Fannie And Freddie Skating On Thin Ice

Fears Grow That Taxpayers May Have To Bail Out Country's 2
Biggest Mortgage Finance Companies

WASHINGTON, July 11, 2008

Fannie Mae, Freddie Mac logos on generic background showing
declining stock prices. (AP/CBS)
(CBS/AP) Fears that the government will be forced
to rescue Fannie Mae and Freddie Mac could well become a self-fulfilling
prophecy.

Shares of the government-chartered mortgage finance giants
plummeted Thursday and are trading at levels last seen in the early 1990s. If
the prices don't recover, it will be harder for the two companies to raise more
money through stock sales to compensate for losses from the housing bust.
Investors are afraid their stakes will vanish if the government is forced to
rescue the companies.

"The government has to step in and do something,"
said Friedman, Billings, Ramsey & Co. analyst Paul Miller.

Freddie
Mac shares fell $2.26 or 22 percent, to $8, after sinking as low as $6.75
earlier in the day. Shares of Fannie Mae fell $2.11, or 13.8 percent, to $13.20,
after earlier falling to $11.70.

Testifying on Capitol Hill, Treasury
Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke sought to calm
investor jitters about the financial health of Fannie and Freddie, while urging
Congress to give them new regulatory tools to better protect the country from
economic and financial havoc if a major Wall Street firm were to fail.


Both regulators endorsed creating new procedures for the government to
guide an orderly liquidation of a failing investment bank to minimize any
fallout inflicted on the overall economy. Such procedures, already in place for
commercial banks, might have made for a more orderly dissolution of investment
firm Bear Stearns.

The Treasury Department has long worked on plans for
what to do if a large financial firm such as Fannie or Freddie failed, but a
department spokeswoman declined to comment on whether such plans have been
accelerated recently.

However, The New York Times reported Friday that Bush administration officials
have recently conducted a "series of meetings and conference calls to discuss
contingency plans" to rescue the mortgage giants if they collapse.


According to the Times report, the government is considering legislation
that would guarantee, with taxpayers' money, the $5 trillion in debt owned by
the two companies.

Bernanke defended the Fed's decision to provide about
$29 billion in loan assistance in JPMorgan Chase & Co.'s takeover of Bear
Stearns earlier this year, but said it "is not something I want to do again."


Despite Wall Street's questions about Fannie and Freddie, and concerns
about other investment banks faltering, Congress has a full plate and is
unlikely to give financial regulators new powers before the next administration
takes over.

Paulson told lawmakers that Fannie and Freddie are "working
through this challenging period," but he would not say if they pose a risk to
the U.S. financial system. "In today's world, it is not helpful to speculate
about any financial institution and systemic risk."

James Lockhart,
director of the Office of Federal Housing Enterprise Oversight, said the
companies' capital levels are "well in excess" of government requirements.


Meanwhile, politicians vowed to intervene if necessary. "They cannot and
will not fail," presumptive Republican presidential nominee Sen. John McCain
told reporters.

"If they need additional support, Congress will act
quickly," Sen. Charles Schumer, D-N.Y., said in a statement.

The two companies are coping
with worries that they won't be able to withstand soaring losses from
foreclosures and home loan defaults.

Washington-based Fannie Mae raised
$7.4 billion in May to fortify its balance sheet. McLean, Va.-based Freddie Mac
plans to raise $5.5 billion, but has been waiting to initiate the offerings
because its stock is not yet registered with the Securities and Exchange
Commission.

Congress created Fannie in 1938 and Freddie in 1970 to keep
money flowing into the home-loan market by buying up mortgages and bundling them
into securities for sale to investors worldwide - thereby making home ownership
affordable for low- and middle-income Americans.

Today the companies
hold or guarantee around $5.3 trillion in home-loan debt, though under a 1992
law they are required to hold only a fraction of what is mandated for commercial
banks as a financial cushion against risk.

Some say those capital
requirements should be far higher, and believe Congress should mandate bank-like
standards. "These guys were skating on such thin ice that, when the stress came,
we're starting to see some cracks" said Johns Hopkins University fellow Thomas
Stanton.

While the government isn't obligated to assist Fannie or
Freddie in a financial emergency, there is a widespread perception that they
would be bailed out if there is a collapse. The idea they are "too big to fail"
enables the two companies to borrow relatively cheaply on global markets by
issuing top-rated mortgage-backed securities.

Fannie and Freddie play a
vital role in the U.S. mortgage market, one that has grown dramatically over the
past year after the subprime mortgage market's collapse. The companies issued
about three-quarters of all new mortgage-backed securities in the second quarter
of 2008, up from under 40 percent in 2006, according to trade publication Inside
Mortgage Finance.

If fears about Fannie and Freddie's health continue to
grow - causing the cost of routine debt sales to soar even further - the Federal
Reserve and Treasury Department would likely provide emergency support to ensure
the companies can continue to buy loans, said Alexandria, Va.-based banking
industry consultant Bert Ely.

"There would have to be some effort to
salvage them," Ely said.

Still, some question whether such anxieties are
justified.

"It's way overblown," said mortgage industry consultant
Howard Glaser. "Psychology is the major problem here."

Glaser, a former
housing official in the Clinton administration, says the companies' government
regulator could give them more flexibility - and reduce the need to raise money
- by loosening capital requirements.

Critics warn that the companies
could threaten the economy and do not have enough capital to withstand financial
turmoil. But Fannie and Freddie executives have consistently called such worries
unfounded.

Freddie spokeswoman Sharon McHale said the company "continues
to hold a surplus above its regulatory requirement that will enable it to
continue to support the nation's housing markets."

Fannie Mae is
"managing our business and maintaining a capital position that will allow us to
fulfill our congressionally chartered mission now and in the future," spokesman
Brian Faith said, noting that Fannie has raised more than $14 billion in capital
since last November.

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redistributed. The Associated Press contributed to this report.