CHESSNOID

Fannie Mae and Freddie Mac will soon officially become a government bailout.  Under the 3 stooges, Bush, Bernanke, and Paulson our economy has suffered severely.    According to Fortune.com:

Paulson asked Congress for the right to use taxpayer funds to intervene - but hoped the pledge alone would be sufficient. “If you have a bazooka in your pocket and people know it, you probably won’t have to use it,” he said at a July 15 Senate Banking Committee hearing.

But now Paulson is readying the bazooka, because the markets didn’t respond as hoped. Shares in the companies bounced back from multiyear lows in recent weeks, but bond markets have not regained confidence in Fannie and Freddie.

The amount the companies pay to borrow in the bond market has risen sharply during the past year.

Fannie and Freddie rely heavily on their ability to borrow money at good rates, which they use to buy mortgages from lenders - they now own or guarantee some $5 trillion in home loans.

Just a year ago, we had these 3 financial wizards saying there was nothing to worry about. Back then, they were all in denial and giving themselves pats on the back thinking their verbal assurances would be all that was needed to do damage control. Obviously, they were wrong. As a matter of fact, all the decisions they have made in panic mode leading us up today has pushed this “unofficial” recession into a more severe state.

The reports were there and the numbers didn’t lie.  Except for the fake numbers they put out now to make it seem that the economy is doing well and are later adjusted to real numbers in hopes the worse is behind us.

Every quarter, every month, and now it seems every other week, the reports on foreclosures and delinquencies seem to rise.  The fed keeps hoping the bottom has hit and we are on our way to recovery.  Yet, every report disappoints and puts more pressure on them to make the right decisions.

NEW YORK (Reuters) - Home foreclosures and the rate of homes entering foreclosure rose to record highs in the second quarter, the Mortgage Bankers Association said on Friday.

“The national foreclosure numbers continue to be driven by the hardest-hit states continuing to get much worse,” Jay Brinkmann, the association’s chief economist and senior vice president for research and economics, said in a news release.

The increases in foreclosures in California and Florida overwhelmed improvements in states such as Texas, Massachusetts and Maryland, he said.

“It is unsurprising that mortgage delinquencies picked up further in the second quarter,” John Ryding, chief economist, and Conrad DeQuadros, senior economist, at RDQ Economics in New York, said in commentary.

“However, the increase in delinquencies and foreclosures up to this point is most likely predominantly the product of poor underwriting standards. Going forward, we have to overlay the weak economy and labor market picture as this more traditional driver of delinquencies will probably become more of a factor,” they said.

As of last Friday, the FDIC added another bank to its list of failed institutes.  I do hope the Fed has a plan already in place for the FDIC.

Silver State Bank was closed by U.S. regulators yesterday, making it the 11th bank to collapse this year amid a surge in soured real-estate loans stemming from the prolonged housing downturn.

Silver State, based in Henderson, Nev., was shut by the Nevada Financial Institutions Division and the Federal Deposit Insurance Corp. It had $2 billion in assets and $1.7 billion in deposits.

Nevada State Bank in Las Vegas will assume the deposits from Silver State, the FDIC said in a statement. The failed bank’s offices will open Monday as branches of Nevada State and National Bank of Arizona.

“Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship,” the FDIC said.

Banks are being closed at the fastest pace in 14 years and regulators have publicly ordered dozens of institutions to shore up capital or restrict their business. California lender IndyMac Bancorp, which had $32 billion in assets, was closed in July in the third-largest bank seizure in U.S. history.