CAR explains what fannie and freddie mean to California real estate prices and sales

My response to this kind of support for a government bailout of California real estate is mixed. I believe that fannie and freddie have been subsidizing loans in a stupid manner for a long time. Making borrowing much to easy. Consequently prices were too high and now the tax payer is going to to get crushed.

The problem is - if we do not bail them out now -- we would probably see a depression.

This is why governments do not need to be involved in private businesses. Sure the should prevent monopolies but did we really need them subsidizing loans. I would be prices would have been lower - interest rates would have been higher and monthly payments would have stayed at more realistic levels if fannie and freddie did not lend on risky deals.

Sure they help home ownership for a few years - but at what cost. Look at how much this is going to cost. Plus I will bet half the people who bought a home in San Diego wish they had not paid so much.

Gmail - C.A.R. Newsline - jmcconnin@gmail.com

Under the conservatorship, both GSEs will be allowed to increase their mortgage funding over the next year and a half, then, beginning in 2010, the plan calls for a reduction in their portfolios of 10 per cent a year until they have been reduced to $250 billion. As part of this weekend's action, both CEOs were relieved of their duties and Herbert Allison, former Merrill Lynch vice chairman, and David Moffett, former U.S. Bancorp CFO, were selected to lead Fannie Mae and Freddie Mac, respectively.

In light of the U.S. Dept. of the Treasury's action, C.A.R. this week reaffirmed its support for Fannie Mae and Freddie Mac and their countercyclical roles. While the short-term impact of the Treasury's actions over the weekend served to calm the markets and restore confidence, in the longer term these entities need to be able to fulfill their historic mission. A privatized Fannie and Freddie will short-circuit the countercyclical role the GSEs have played during precarious times in real estate markets.

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In light of the U.S. Dept. of the Treasury's action, C.A.R. this week
reaffirmed its support for Fannie Mae and Freddie Mac and their
countercyclical roles. While the short-term impact of the Treasury's
actions over the weekend served to calm the markets and restore
confidence, in the longer term these entities need to be able to
fulfill their historic mission. A privatized Fannie and Freddie will
short-circuit the countercyclical role the GSEs have played during
precarious times in real estate markets.