Fed Chair Bernanke today urged Congress to increase regulation of Fannie Mae and Freddie Mac - to limit their holdings and limit the amount of their debt portfolios.
Talk about closing the barn door after the horse is gone! The message is clear. The Fed is worried. They even have Alan Greenspan running point - sounding the recession alarm.
Any significant stumble in the Fannie Mae or Freddie Mac portfolios (accelerating loan defaults, for example) will have a devastating result on the securities market. A failure by either or both could cause recession or worse.
As investors, this of course is good news. The hungrier the lenders get, the bigger the discounts. The ultimate investor dream is to return to the RTC days, buying properties in blocks for pennies on the dollar.
Patience, Investor. Patience.
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