Fannie and Freddie Fallout: What the Experts Say
Losses May Spiral Out
"Capital has to go up and rates have to go up over the long term... but if [Fannie and Freddie] have to pull back substantially [on their lending] the housing market is at risk of another significantly down [move] not only in home purchases but in prices. And that's a spiraling effect on losses for the U.S., Fannie and Freddie and banks."
- Robert Napoli, Managing director Piper Jeffray
Why The Government Should Bail Them Out
"These companies are giant money makers. The government should put money in them. Three years from now we're all going to come out of this and say, 'Why weren't we in with the government?' The tax payers will make money. This is a bailout you want the government to be in."
-Jim Cramer, Mad Money
The Global Downside to the Bailout
"A bail out of these two institutions could have significant ramifications, further ramifications for deterioration of the dollar. You may even draw in some questions in regard to sovereign debt downgrades. It's going to cost that much."
-Manus Cranny, MF Global
Advantages to Short Selling
"I think short sellers are going after them, but I don't think in an unreasonable way. I think there are a lot of mortgages they've guaranteed and there's just not that much equity there."
-Manny Weintraub, Intefre Advisors
The Underlying Issues
"I think [a bail out] is a short term fix. Just like Bear Sterns, it gives the market a bit of comfort in the short term. I think in the longer term the underlying problems have to be addressed. The U.S. housing market is still very very weak, foreclosures are at a record high, and prices could head farther south."
- Vasu Menon, OCBC Bank
Dollar in Deeper Trouble
"Initially it is good news that there is going to be government backing and there is going to some form of a bailout but over the larger scenario the fact that these institutions are in such trouble could not be good for the U.S. dollar."
- Simon Grose-Hodge, LGT Bank Liechtenstein