Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

“We have a system that increasingly taxes work and subsidizes nonwork.”     Milton Friedman

April 22, 2009

Bad News From Fannie/Freddie: Especially Freddie

by Brad Warbiany

As a renter in Southern California, I’m torn between the happenings in the housing market. I see some of the lower-end properties get listed low leading to bidding wars, and see the DJIA appearing to keep strength on the banks’ earning claims, but at the same time I don’t feel the trouble has worked its way through the system yet, and prices are going to continue falling.

We’re watching the dominoes fall. With each new domino, our market prognosticators aren’t really yet asking when the dominoes will be set back up again, they’re just hoping against hope that another won’t fall. Well, with the recent record high in foreclosures for Q1, and now an apparent problem with prime defaults at Fannie & Freddie, we might be watching another one drop.

Increasing Defaults, image c/o The Big Picture blog

Increasing Defaults, image c/o The Big Picture blog

How bad is it? Well, the CFO of Freddie Mac was discovered this morning, dead by apparent suicide:

The acting chief financial officer of mortgage finance giant Freddie Mac, David Kellermann, was found dead Wednesday morning, police said.

The death “may have been an apparent suicide,” said Lucy Caldwell, a spokeswoman for police in Fairfax County, Va.

Authorities said there were no signs of foul play when officers were called to Kellermann’s home in Vienna shortly before 5 a.m. ET, Caldwell said. A source familiar with the investigation said Kellerman apparently hanged himself.

In all seriousness, we wish the Kellermann family our condolences at this time. While we at TLP have [rightly] savaged Fannie & Freddie’s business practices, it was professional, not personal. Even to the extent that Freddie’s woes were even partially caused by any specific employees, it’s simply should not come to a tragedy like this.

So how do I think the economy is doing right now? It isn’t over, folks. The bottom is still in the future.


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