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Saturday, July 19, 2008

Fannie and Freddie are fine, says Bernanke

Federal Reserve Chairman Ben Bernanke reassured Congress last Wednesday that Fannie Mae and Freddie Mac are in “no danger of failing.” That's Ben in the middle telling Congress that he sees no problems with Fannie and Freddie. Fannie, on the left, refused to listen to congressional concerns, while Freddie on the right invoked his fifth Amendment rights and refused to testify.

The two mortgage giants are "adequately capitalized," Bernanke said. However, "weakness of market confidence is having an effect" on the companies, making it difficult for them to raise capital.

"We will work our way through these financial storms," Bernanke said.

He called the depressed housing market the central economic issue and urged Congress to approve legislation helping consumers refinance out of troubled mortgages, set a stronger regulator for mortgage giants Fannie Mae and Freddie Mac, and approve a new Treasury Department plan to bolster the two firms, which back half of U.S. mortgages; although Bernanke couldn't relate why the two firms needed bolstering, considering his earlier statements that they were OK.
Bernanke went on to reassure displaced residents of New Orleans or those that have returned and now live in contaminated trailers that the big guy - Bushee - is still doing a heck of a job. In other related news, FEMA said that it is still studying whether or not to declare New Orleans to be in a flood zone. The FEMA director said that they don't want to make a hasty call on that critical designation, since it could affect the ability of home buyers to get loans back by Fannie Mae and Freddie Mac. More on that as it develops.

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