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Fannie, Freddie and us

September 11, 2008

Re "U.S. seizes mortgage titans in multibillion-dollar rescue," Sept. 8

The working-on-Sunday seizure of Fannie Mae and Freddie Mac may represent the largest economic failure, and the largest government bailout, in the history of the United States.

I can recall the hue and cry about the $1.5-billion loan guarantee that was extended to Chrysler in 1979 -- a loan that Chrysler paid back early, by the way. The $200 billion that Treasury Secretary Henry M. Paulson would have us taxpayers pay for this bailout is mind blowing. Paulson's plan calls for shrinking the operation over a number of years, which suggests to me that there will be a sell-off of Fannie Mae and Freddie Mac assets at fire-sale prices.

It's Washington as usual: huge profits for the billionaires while we, the American people, foot the bill.

Kim Iannone

West Hills

Re "Fat Fannie and Freddie," editorial, Sept. 9

Thank you for showing some understanding of the position of shareholders of Fannie Mae and Freddie Mac, of which I am one.

Some have characterized us as speculators who presumably deserve no consideration -- but I didn't feel like a robber baron when I invested some of my retirement savings in Fannie preferreds in May, expecting to earn 8%. Others have characterized us as fools for believing the repeated assurances of government officials, including by Paulson and Federal Housing Finance Agency Director James Lockhart, that Fannie's and Freddie's capitalization was sufficient.

Perhaps we are fools -- but simple justice would seem to call for allowing us to maintain our positions and for the government to put in capital only as needed, so that if some of the earlier optimistic projections should prove true, we shareholders can recoup at least some of our losses.

Arnold Dicke

Studio City

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