If Fannie Mae and Mac went bankrupt would it cause a depression ?

Question

Not that they are already in trouble do you think them failing would contribute to a depression along with other factors like high gas/food prices etc?

If not explain why?

Answer 1

I have posted this recently, will look for it, or add me to search.

Fannie and Freddie cannot fail. It would cause a ripple effect through our financial system like we have never seen.

1 out of 2 of ALL mortgages in the USA are backed by these 2 companies - $5 Trillion Dollars. The US National Debt is about $9 Trillion.

Bill Gross of Pimco (#1 Bond Dealer) said we could be looking at $1 Trillion worth of mortgage risk right now.

http://www.bloomberg.com/apps/news?pid=2...

The FED is reportedly holding (guaranteeing) about $1.43 Trillion of US mortgages right now.

-- CNBC TV 07-25-08

Answer 2

It would be far, far worse that a depression. It would cause the entire collapse of the American credit market, which would destroy our economy and I’d have to think also our system of government. Because of the global economy, you’d see worldwide issues as a result.