Patrick A. Heller over on Numismaster.com has a fine article today about the Fannie/Freddie disaster. Here is a sample:

On Sept. 7, U.S. Treasury Secretary Henry Paulson announced plans for the federal government to seize control of troubled mortgage lenders/buyers Fannie Mae and Freddie Mac.

The two companies will be placed in conservatorship under management of the Federal Housing Finance Agency. As part of the agreement, the federal government will receive some $1 billion of senior preferred stock in each company plus warrants for a right to a 79.9 percent stake in each company. In return, the federal government has agreed to provide as much equity capital as needed to cover all future losses from mortgage defaults.

The two companies together hold over $5 trillion in residential real estate mortgages, roughly half of the entire U.S. market. In the 12 months ended June 30, 2008, the two companies had reported a combined $14 billion in losses.

Fannie Mae and Freddie Mac have almost $200 billion in short-term debt that was maturing in the next four weeks. The prospects of rolling over this debt were so poor that government officials feared an imminent failure of the real estate mortgage market. By taking over the two companies, the federal government is able to prevent the immediate collapse of this market.

Government officials are promulgating the BIG LIE in trying to understate how much this takeover will cost the federal government (i.e., taxpayers). Almost every news report I have heard or read cites the Congressional Budget Office cost estimate of only $25 billion.

Conservatively, that is a TRILLION DOLLAR LIE!

Read the full article here….