For those who may have missed it, there was a notable development on December 24 concerning Fannie Mae and Freddie Mac. Here is The Wall Street Journal link and the Treasury Dept link:
http://www.ustreas.gov/press/releases/2009122415345924543.htm
http://online.wsj.com/article/SB126168307200704747.html
Basically the government announced plans to cover an unlimited amount of losses at both companies.
It is yet another testament to the extent of intervention in the real estate markets.
I think this “blank check” approach carries many risks. A while back I wrote an article about how interventions could be effectively managed. The article is not intended to condone or support the concept of interventions. However, there should be a regimented approach to their administration. These interventions carry a tremendous amount of risk, aside from the substantial amounts of money being expended. Here is the link (it is also listed among the articles on the right-hand side of the home page):
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SPX at 1126.48 as this post is written