That’s economic genius (and potential VP candidate) Christopher Dodd (D-CT), speaking about Fannie Mae and Freddie Mac:
With share prices of Fannie and Freddie plummeting daily, are the government-sponsored entities really in a position to help rescue people whose homes are headed for foreclosure?
“They’ll be fine,” Senate Banking Committee Chairman Chris Dodd, D-Conn., told reporters Friday. Dodd, who helped shepherd the bill [increasing regulation of Fannie and Freddie] through the Senate, says the companies are “fundamentally sound and strong,” noting that they hold excess capital and that their portfolios are primarily made up of healthy, 30-year fixed-rate loans.
“There’s no reason for the kind of reaction we’re getting,” Dodd added, referring to what he described as “panic” on Wall Street. Fannie and Freddie shares have experienced multiple sell-offs after an analyst report Monday indicated that they needed to raise a combined $75 billion.
It’s always charming to hear a legislator tell us that the market is wrong.
Two days later, the Federal Reserve and the White House announced that Fannie and Freddie need a government bailout.