Freddie and Fannie – A Penny Stock Tale

I found this interesting article relating to the economic crisis and the mortgage meltdown. Put in on your tin foil hat as some of you may see this as a bit of a conspiracy theory, but I found it at least thought-provoking.

Please note that Buying Penny Stocks isn’t promoting or supporting any single viewpoint on this matter. I just find it to be a compelling and informative discussion of the mortgage crisis. You’ll definitely find some articles on this site (a New Zealand news site) which I find silly and objectionable.

Here’s a glimpse:

Combined with the digitization of the mortgage credit scoring, origination and servicing process, the implications for privacy and personal freedom are simply stupefying. And the best part is that this can be described as the government “helping.”

I have described the fundamental US strategy on numerous occasions over the years. It was my misfortune to try to propose an alternative strategy. When that made me a target of a legal and economic “hit,” I attempted to warn people of the dangers. Those who heeded those warnings avoided direct harm from the burst in the housing bubble, including the drop in Freddie and Fannie shares to penny stocks. While living with the horror and grief of realizing that most would not heed those warnings, I concluded that we were experiencing a financial coup d’etat.

And another interesting sequence much further in the piece:

The financial press this morning reports that Daniel Mudd, the retiring CEO of Fannie Mae, is leaving with a severance package of approximately $9.2 million. Richard Syron, the retiring CEO of Freddie Mac, is leaving with a severance package of approximately $14.9 million.

It would appear that the federal government intends to honor these contracts.

In these situations, observing when the federal government honors its contracts and when it does not often provides a clue to the deeper story.

For example, my company, Hamilton Securities Group, had a contract that the federal government canceled for convenience in 1997. At that time, the federal government owed us $2.1 million. Rather than honor their debts, they claimed the common law right to assert an “offset.”

Read the whole compelling story here: Fannie and Freddie Become Penny Stocks

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