The long rumored takeover of Fannie and Freddie (the GSE twins) finally happened this weekend. What this means for the near term and long term remains unclear. Let me tick off a few points.
The Regulators judgment is that the consequences of collapse would have been too catastrophic. I am sure they are right. This is kind of like having to buy the house next door before it falls on yours. It might be easy to agree that you have to buy it but that doesn’t tell you how to buy it, what to do with it when you own it and how you avoid having to face such an unpleasant decision in the future. It also doesn’t tell you how you are now going to pay both mortgages. More to follow.