The Senate Budget Committee has recommended strongly to close down Fannie Mae and Freddie Mac. Whew! That would be a fitting close to a sad chapter in the housing market. But it’s not without repercussions.
Basically the Treasury made a smart move investing in a GSE bailout. But they’re not so confident that they’ll just let their money ride. They’re pulling out in a big way – by shutting Fannie and Freddie down.
Stocks for these two organizations dropped sharply with the announcement. Though when a new government body forms to take over the responsibilities we’ll see how quickly investors flock to it. But as long as they don’t bring down the market again (for now at least) I think this is definitely a step in the right direction.
What do you think? Are you excited about this news?