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Yeah but Fannie and Freddie cant go backrupt because they have the ability, under force of law, to modify their fees and to increase the Mortgage insurance rates on everyone else.
They are also backed by federal guarantees, which is how they get investors to buy into them, so if they go under, the country is in huge trouble.
They can most certainly go bankrupt. They are private businesses, albeit with an implied government backing. Them going BK would just mean the end of buying houses with mortgages, for the most part, unless like I mentioned earlier interest rates went through the roof.
It won't be the end of the world if it happens. America has adapted and will continue to do so.
I think the point is - in today's uncertain economy - don't put all your eggs in one basket. If you work in the financial industry, make sure your not heavily overloaded in those stocks from your own company. Also, make sure your deposits are well under FDIC limits.
I think the point is - in today's uncertain economy - don't put all your eggs in one basket. If you work in the financial industry, make sure your not heavily overloaded in those stocks from your own company. Also, make sure your deposits are well under FDIC limits.
And in things other than US Dollars and Dollar denominated items -- like US Corporate Stocks, T-bills, etc.
Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
16,259 posts, read 24,752,651 times
Reputation: 3587
Quote:
Originally Posted by pghquest
Actually banks can and do fail. What is backed is the deposits, meaning that when a bank owes more money to the depositors in its bank, its insolvent. Yes, the federal government makes the deposits good, but they take over managing the bank, liquidating the assets, and the depositors lose their interest.
Maybe I should have worded that better. They can fail- they just cannot "FAIL". The bank can lose money and go out of business (or be put out of business by the FDIC) but then the government steps in, opens the bank back up and runs it or finds a solvent bank to take it over. My mother had money and a safe deposit box in a bank that failed (Boulevard State Bank of Kansas) and she did not lose a dime of money or anything in her box. She went after the FDIC opened up- got all her things and her money with no problem. Interestingly enough, the bank is now a mortuary! How fitting!
Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
16,259 posts, read 24,752,651 times
Reputation: 3587
Quote:
Originally Posted by Jim Toole
They can most certainly go bankrupt. They are private businesses, albeit with an implied government backing. Them going BK would just mean the end of buying houses with mortgages, for the most part, unless like I mentioned earlier interest rates went through the roof.
It won't be the end of the world if it happens. America has adapted and will continue to do so.
It would be the end of housing- at least from an investment point of view. One of the reasons for the run up and appreciation in home prices is the ability to get cheap loans to buy real estate. If people had to pay cash or pay sky high rates to finance, home values would fall like a rock.
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