It’s one thing when CNBC’s Jim Cramer says Fannie Mae and Freddie Mac are "technically insolvent", "over-the-top" comments are his trademark. Now however, we are hearing the same thing from a noted and less flamboyant source– former St. Louis Federal Reserve President William Poole:
Chances are increasing that the U.S. may need to bail out Fannie Mae and the smaller Freddie Mac, former St. Louis Federal Reserve President William Poole said in an interview. Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules, he said. The fair value of Fannie Mae’s assets fell 66 percent to $12.2 billion, data provided by the Washington-based company show, and may be negative next quarter, Poole said.
“Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer,” Poole, 71, who left the Fed in March, said in an interview.
Ouch.
