You’ll Shoot Your Eye Out, Kid

Absent a sentimental story line, the US Treasury Department has chosen to give Fannie Mae and Freddie Mac the gift likely at the top of their Christmas lists — one which will prove far more harmful than an official Red Ryder Carbine-Action Two-Hundred-Shot Range Model Air Rifle. Bloomberg discloses:

The U.S. Treasury Department will remove the caps on aid to Fannie Mae and Freddie Mac for the next three years, to allay investor concerns that the companies will exhaust the available government assistance.

The two companies, the largest sources of mortgage financing in the U.S., are currently under government conservatorship and have caps of $200 billion each on backstop capital from the Treasury. Under the new agreement announced today, these limits can rise as needed to cover net worth losses through 2012.

Cap removal will accompany the eligibility of Fannie Mae Chief Executive Officer Michael Williams and Freddie Mac CEO Charles Haldeman Jr. for individual compensations of as much as $6 million this year, although an apposite, incentive-based stipulation would involve compelling the mortgage financiers’ CEOs to wear pink bunny pajamas.


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