Freddie Mac and Fannie Mae will be the primary reason behind the mortgage crisis. These federal government supported enterprises distorted normal market risk mechanisms. There is no panic on Main Street and in sound financial institutions. The problems are in high-risk finance institutions and on Wall Street. While all financial intermediaries are being impacted by liquidity issues, this is mainly a bailout of poorly run financial institutions.
It is really important that the bailout not damage well-run companies. Corrections are not all bad. The marketplace correction process removes irrational competitors. There were lots of poorly handled institutions and made financial decisions through the real property growth badly. It is important that any rules post “rescue” punish the poorly run institutions rather than punishing the well-run companies. A significant and immediate taxes credit for purchasing homes will be a far less expensive and more effective treat for the home-loan market and economic climate than the proposed “rescue” plan. That is the casing value problems.
It will not make financial sense to purchase credit credit card loans, automobile loans, etc. The federal government should directly purchase housing resources, not real estate bonds. This would include houses and plenty under building. The guaranty of money funds by the U.S. Treasury creates tremendous risk for the banking industry. 100,000 per customer. An arbitrary, “out of nowhere” warranty of money funds creates risk for the taxpayers and significantly distorts financial marketplaces. Protecting the banking system, which is managed by the Federal Reserve fundamentally, is a …