Fannie Mae and Freddie Mac to be taken over by Feds

I will just give you the late Friday story from the NYT:

Senior officials from the Bush administration and the Federal Reserve on Friday called in top executives of Fannie Mae and Freddie Mac, the mortgage finance giants, and told them that the government was preparing to place the two companies under federal control, officials and company executives briefed on the discussions said.

It is not possible to calculate the cost of any government bailout, but the huge potential liabilities of the companies could cost taxpayers tens of billions of dollars and make any rescue among the largest in the nation’s history.

With foreign governments growing increasingly skittish about holding billions of dollars in securities issued by the companies, no sign that their losses will abate any time soon, and the inability of the companies to raise new capital, the administration apparently decided it would be better to act now rather than closer to the presidential election in two months.

Who might this help? Obama - because Democratic Presidents are better for the economy and better for most taxpayers.

The two Great Partisan Divides combine to suggest that, if history is a guide, an Obama victory in November would lead to faster economic growth with less inequality, while a McCain victory would lead to slower economic growth with more inequality. Which part of the Obama menu don’t you like?

With the economy getting worse, Obama has a stimulus plan ready.

The Obama camp urged Congress to enact the $50 billion stimulus package that the senator recently proposed. Most of the money would go to states and cities, “so they don’t have to cut back on health care and education and can rebuild roads and schools,” Mr. Obama said in a statement.

In their response to this latest employment report, the two candidates appeared to be emphasizing what they would do to give the economy a quick lift, while pushing into the background, at least for the moment, their longer-term economic proposals. The monthly employment report is a government statistic that registers widely with voters, and the candidates’ call for another stimulus package appears to reflect not only their concern about the jump in unemployment in August, but the likelihood that the September report, due out on Oct. 3, will be just as dreary.

“The debate about whether or not this is a recession is foolish,” said Robert Barbera, chief economist at the Investment Technology Group. “This is a recession.”