So Fannie Mae, Freddie Mac and a U.S. taxpayer walk into a bar and order drinks. Fannie looks at Freddie and says, "Why'd you bring the boring guy along?"
"He's our designated driver," says a tipsy Freddie. "And he's paying for the whole tab."
This weekend's remarkable federal takeover of Fannie and Freddie — the teetering twin towers of the U.S. mortgage market — was welcome and stabilizing news not only to Wall Street and global investors, but to Tampa Bay area banks and brokers trying to provide loans to home buyers.
Had the feds not stepped in, warned Ritch Workman, president of the Florida Association of Mortgage Brokers, the country could have faced an economic depression. And mortgage rates now near 6 percent would have doubled to 12 percent.
"We would quickly become a nation of renters if that happened," he said.
Without the trillion-dollar system that lets local lenders supply mortgages then sell them off to Fannie and Freddie, who then package them for sale to investors worldwide, the ability to buy a house would be far more cumbersome and expensive.
With the federal rescue, look for 30-year mortgages now running near 6.4 percent to come down to 6.2 or even 6.1 percent.
"Rates move up on fear but down on fact," says mortgage banker Bob Saltzman at JPMorgan Chase in Tampa. The bailout removed the uncertainty of Fannie and Freddie's future, prompted a bond rally and should make the financing of homes more affordable.
But repetitive financial bailouts by the U.S. government should be setting off alarm bells. Last summer, the Fed stepped in to provide low-cost loans to banks to unfreeze certain financial markets. In March, the government intervened and forced troubled Wall Street firm Bear Stearns into the arms of JPMorgan.
A federal takeover of Fannie Mae and Freddie Mac should have surprised no one. These are not private corporations in the usual sense of the word.
Fannie Mae, once known as the Federal National Mortgage Association, was born as a government agency under President Franklin D. Roosevelt's New Deal plan to provide funds for the mortgage market. Freddie Mac, once called the Federal Home Loan Mortgage Corp., was created by Congress in 1970 to help sell pools of home mortgages as securities to investors worldwide.
Rumors still swirl that another legendary Wall Street firm, Lehman Bros., will need a federally subsidized rescue like Bear Stearns. And in the blink of an eye comes the U.S. auto industry seeking $50-billion in government loans to modernize plants and make more fuel-efficient vehicles. But it's not a bailout, automakers insist.
The U.S. Treasury Department's rescue attempts lately bear a disturbing resemblance to the beleaguered firefighters out West. They put out one wildfire only to see two more crop up in the distance.
Getting a mortgage a few years ago was about as easy as breathing air. Workman, a Melbourne mortgage broker, calls it the era of "check a pulse, close a loan."
No more. For every three people seeking a home loan, one now qualifies, he estimates. And that, Workman says, is a good thing.
It's one of the signs we're heading back, slowly, to less frantic times.