COMMENTS: Massive Nationalization Too Difficult to Lead With
The home mortgage guarantee industry was nationalized over the weekend. FNMA and FHLMC, the government sponsored enterprises nicknamed FannieMae and FreddieMac, posted losses of $14bn in the bear market in housing over the last year. Now they are being run by the Treasury Department; the government has so far pledged $200bn in capital to support their $5tr in guarantees, which represent fully half of all mortgages nationwide. Such a massive bailout was both important enough to be Story of the Day and obscure enough not to be chosen as a lead item. Both ABC and NBC opted to lead from the campaign trail instead. CBS took the day off as its newscast was pre-empted by the rain-delayed final of the USOpen tennis tournament.
ABC's Betsy Stark did note that the federal takeover came during "the worst housing crisis since the 1930s" but she warned that the plan "will not be a magic bullet." NBC anchor Brian Williams consulted CNBC economist Steve Liesman about the odds of continuing defaults swallowing up the entire $200bn that taxpayers are ponying up. The dismal scientist could not say: "You know, we could get none of that; some of that; or all of that; but we may end up putting in more."
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