This takes me back to the late eighties, when the old Lady's Governor announced that the Bank of England would no longer necessarily bail out a bank just because it was a bank. Many years later, driving back after b-school, I heard Eddie George on the radio announcing the bankrupcy and immediate wind-up of Barings Bank.
Barings was old and venerable, but tiny. A ripple in the pond. Fannie Mae and Freddie Mac are ... none of that!
WASHINGTON (Reuters) - U.S. Treasury Secretary John Snow took direct aim Tuesday at mortgage finance firms Fannie Mae and Freddie Mac, repeating previous warnings to investors that government-sponsored enterprises are not financially backed by the U.S. government.
"We don't believe in a 'too big to fail' doctrine, but the reality is that the market treats the paper as if the government is backing it. We strongly resist that notion," he said in prepared remarks before a bankers group here.
"You know there is that perception. And it's not a healthy perception and we need to disabuse people of that perception. Investments in Fannie (FNM: Research, Estimates) and Freddie (FRE: Research, Estimates) are uninsured investments," he said.
...Posted by iang at March 10, 2004 02:51 PM | TrackBack