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Mass. banks tops in Fannie Mae, Freddie Mac stock
Thanks Barney and FriendsThe collapse of mortgage giants Fannie Mae and Freddie Mac could soon hit home for Bay State banks. The American Bankers Association said yesterday that more Massachusetts lenders hold Fannie Mae and Freddie Mac preferred stock than financial institutions in any other state. Every state in the nation is affected, (but) the largest number of banks with exposure (is) in Massachusetts, ABA officials wrote in a letter outlining the problem to federal officials. In 2003, Barney Frank opposed Bush administration and Congressional Republican efforts for the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis. This is the same guy who in 2006, was one of only three Representatives to oppose the Respect for America's Fallen Heroes Act. I wonder what will turn up in other states when the rocks are turned over? Unfortunately, the U.S. governments recent Fannie and Freddie takeovers make the two mortgage firms shares virtually worthless. The move also eliminates dividend payments to Fannie and Freddie stockholders. As a result, U.S. banks will collectively lose as much as $15 billion on Fannie and Freddie stock, the ABA told regulators. And because banks typically loan out $7.60 for every $1 in assets held, those losses could translate into as much as $114 billion of reduced lending, the group estimated. Posted by: JohnQC 2008-09-24 |
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