The U.S. government nationalized Freddie Mac and Fannie Mae
by admin on 21/03/09 at 3:21 pm
The U.S. government feels really deep in crisis and has decided to nationalize two key institutions for the U.S. economy. The operation will be to make state Freddie Mac and Fannie Mae, two institutions that absorbed (or better funded) 80% of the mortgage crisis.
The intervention will cost taxpayers a lot of money Americana’s estimate about 26 billion dollars for this operation. Unfortunately, the government could not afford a failure of these two institutions triggering a chain reaction that could be a lot more devastating than we think.
Some in fact the operation was not done to save the American taxpayers who are already in a crisis black, but because the institutions would be saved indebted to one of the largest central banks around the world.
The Chinese central bank seems to have a lot invested in these two institutions by buying a flood of titles that were subsequently written off then creating damage and losses to the central bank.
So the failure of these two institutions would also panic in the financial market.
Nationalization arrived promptly but as a non-usual in the USA. Everything certainly need to try to take the reins of the crisis or at least try to limit the damage of the fall.
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