Fannie and Freddie

We spoke about TARP in class and mentioned the issue of Fannie and Freddie (the quasi private mortgage giants). This is an excellent piece (I think it is the first piece actually). It is worth listening to (click on the "Listen to the Podcast" link)

Update I: Here is an interesting article about how the executives for Fannie and Freddie were paid millions. Tough to justify the heads of these failed organizations millions in salaries from taxpayers.

Update II: Part 2 here and Part 3 here

Please be sure to at least listen to the first one.

The Beginning of TARP

We learn about the theory behind TARP and we read about it in the paper, but this video really explains how things really started. Please take the time to watch the video and be ready to discuss it next week.

Forclosure

An excellent link that helps connect the dots to how our housing crisis is linked to our financial crisis via NPR.

In the Beginning

Confused about the bank ‘bailout’ and terms like ‘TARP’. What exactly did happen in the financial industry last September just as the mess began? This piece pulls much of it together very nicely.

Be sure to go to 'Watch the full program online'

How to Turn Toxic Assets into Liquid Assets

For the first time I can remember there are some details disclosing how the government is going to handle the ‘toxic assets’ that are floating around out there.

As a refresher: Housing bubble leads to decreased housing prices. Decreased housing prices leads to increased foreclosures. Increased foreclosures lead to tightening up of the credit industry. Tightening up of the credit industry leads to decrease demand for houses (can’t get the loans). Decreased demand for houses leads to decreased housing prices.

This was the scenario six months ago that sparked this financial mess. Many people believe a ‘bail out’ of the financial industry is different than other industries if only for the fact that the above cycle needs to be stopped (plus there are negative externalities as some people are effected other then the home buyer and seller… think student loans). The original ‘bail out’ (TARP as it is now called) was originally 700 Billion dollars to combat this problem. One annoyance was that there was never any transparency to the program (no one knew what was going on).