Wipe Out!

Fannie and Freddie are dead. Long live the mortgage market!

With the stroke of a pen, Hank Paulson wiped out billions of dollars in shareholder investments and simultaneously sparked a 200 billion dollar rally in the stock market. The Agencies will continue to do business, but now the taxpayers will be on the hook for the losses that have come about from the last 5 years of aggressive lending.

This solution was apparently “baked in the cake” a couple weeks ago when Freddie’s CEO came back from New York empty handed. Apparently the Feds are the only investors willing to belly up to the bar.

What’s next? For now, the mortgage market has been stabilized, with rates falling almost half a point. Long term, it’s hard to see how anyone will trust a government agency with so much dominance again. But then, I thought Amtrack would die in the ‘70s.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-03T21:02:11+00:00 September 9th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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