The Wall Street Journal paints a rather bleak picture for the current U.S. mortgage crisis and the health of Fannie Mae and Freddie Mac in particular. According to the piece in yesterday's paper, nearly "a year and a half after the outbreak of the global economic crisis, many of the problems that contributed to it haven't yet been tamed."
The paper also disagrees with the Obama Administration's plans for allowing defaulted homeowners to hang onto their houses. It added that derivatives "contracts of the kind that crippled American International Group Inc. still trade in the shadows. And investors remain heavily reliant on the same credit-ratings firms that gave AAA ratings to lousy mortgage securities."
Regarding Freddie Mac and Fannie Mae, the Journal noted that they "remain at the core of a housing-finance system that inflated a dangerous housing bubble." And went on to say, "Fannie and Freddie remain troubled wards of the state, with no blueprints for the future and no clear exit strategy for the government."
On that cheery note...
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