Announcement Freddie and Fannie going broke

[69gt4speed]

The companies _ particularly Freddie Mac _ didn't raise enough cash to reassure Wall Street that they would be able to withstand a severe downturn in U.S. home prices.

As their losses started rising at alarming rates, investors simply lost confidence, forcing the government's historic takeover of the two companies, which could be announced as soon as Sunday.

Washington-based Fannie and McLean, Va.-based Freddie are the engines behind a complex process of buying, bundling and selling mortgages that remains a mystery to millions of Americans whose home loans pass through this system. Together Fannie and Freddie hold or guarantee about $5 trillion in mortgage debt _ about half of the nation's total.

Bottom line that means someone has to pay for it. Someone is the taxpayer. Oh yea did I mention other banks going broke? Yea I did.

[Drifte]

id be really worried, but I'm a poor college student with no money to lose and I rent.

But this will probably effect me in some way...some day.

[69gt4speed]

I know some of you say that, but maybe you have a job w a 401k. We checked our conservative fixed account option and guess what, 70% is invested into the mortgage market. So every 1 dollar, .70 goes into the mortgage markets, most ppl would think it would be gov. bonds etc. Banks just probably lost their azzes the other day w the premium account shares in fannie and freddie. Worst case, think of this, if ur parents lose lots of dollars in their 401k's at retirement, they turn to you to help out. Not that far fetched. Right now next door the whole family has got back together for financial reasons, meaning they all live in same house. Guess that's good for saving money if you can get along.

[ZacFields]

It's not the best market out there, for sure. Nothing I can do about that, though. I keep my 401k invested 100% in high-risk mutual funds (none are in the mortgage market) and enjoy buying these stocks at good prices so when the market turns back up I'll get some nice gains.

I'm actually thinking of investing a little in Freddie and Fannie. Their stock price plummeted to around 40-50 cents per share depending on the day, but being shielded from bankruptcy by the government, they should make a turnaround when this is all over. I'd say it's a good long-term hold.

I'm sure I'll see another 3 or 4 near-recessions in my lifetime. All I can do about it is be smart about the financial decisions I make and keep on truckin!