Here are two men in pain. They are trying to lay the ground work for a bailout of Fannie Mae and Freddie Mac. As my friend Vince Farrel tried to explain a couple of weeks ago.
What bothers me here is Fannie has a debt-to-equity ratio (a measure of how leveraged they are) of 27 to 1, and Freddie 20 to 1 (thanks to David Wessel of the WSJ for those stats.) Bank of America and JP Morgan are both about a 4 to1 debt to equity ratio. So let me be sure I have this right. Two quasi-government agencies, with scandalous accounting issues in their recent past, leveraged to the gills far beyond what the private banking system would allow (and haven’t those banks suffered as well?) are going to lead us to the promised land and away from the housing debacle. Right !