U.S. Government To Put $400 Billion Into Fannie Mae, Freddie Mac

The government pushed Fannie and Freddie to buy $1.7 trillion worth of risky mortgage assets.

Priming the housing market pump?

Well, it flooded it. Why is the government subsidizing the buying of toxic mortgages?

Insane.

THE LAT SAYS:

Speculators poured into shares of Fannie Mae and Freddie Mac today, on the first day of trading after the Obama administration in effect gave the companies blank checks of federal support.

But exactly how the government’s move makes a payoff for Fannie and Freddie shareholders more likely in the long run, rather than less likely, ought to puzzle most investors.

It mystifies veteran banking analyst Bert Ely at Ely & Co. in Alexandria, Va. “They’re not going to get anything back,” he says of any investors who have long-term faith in the mortgage giants’ shares.

Of course, “long-term” for most people trading these stocks probably means an hour or so.