July 19, 2008
The Facts
Fannie Mae and Freddie Mac are almost bankrupt. These two government sponsored financial institutes have been headline news for eight days now due to their financial crisis. But they’re refusing to accept any government bailout at this time, although their reserve money is less than 5% of their total debt. The stock plummeted until last Thursday, when a small upward bounce was seen. So why haven’t they ask for government help? Simple; at least for Freddie Mac. The big cheese at Freddie Mac, Richard Syron, stands to personally loose $11 million if the Feds step in. And the rest of the executives there will also loose a lot of money.
My View
As far as I’m concerned, they could both fail, in spite of those who say “they are too big to let fail”. This has to end sometime. And Syron and the rest of the executive staff should be prosecuted, and probably could be if we really wanted to apply the current laws we have. But, as we all know, we can only punish “one or two” white collar boys per decade, and we only do that to show we are not showing favoritism. But since Syron was awarded $10.6 million for failure in 2007, he probably has enough to successfully “defend” himself.
I suspect Syron and the others will try to figure out a way to hold on until those big pay days arrive, then I imagine the bailout will happen. That seems to be the MO for CEO’s these days and times. And, as is the case most of the time, we middle class taxpayers will be stuck with the bill. Just another government subsidy, or as some might say, another entitlement for big business.
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