Two of the nation’s largest lenders have been taken over by the federal government; a move that a University of Missouri financial expert says was inevitable.
Fearing what effect a collapse of Fannie Mae and Freddie Mac might have on the economy, the federal government stepped in and took over. The intervention could amount to a $200 billion federal intervention. MU financial planning professor Robert Weagley says there weren’t any options left. He says the federal government is the only entity that has the financial ability to take-over the deteriorating situation.
Fannie Mae and Freddie Mac are creations of Congress. They provide funding for about three-quarters of new home mortgages.
Weagley says the biggest benefit to the government’s action is that it will bring stability to the housing market. He says too many potential homeowners have been waiting on the market to drive home prices even lower before buying. Weagley believes the government’s action will motivate those potential homeowners to pull the trigger and buy.
The future of Fannie Mae and Freddie Mac is uncertain, says Weagley, who says the next president will have a big say in it.
Download/listen Brent Martin reports (:60 MP3)
