Question:

Is Bernanke, Paulson, and Cox saying that the Fed will not allow Fannie or Freddie to ever fail?

by Guest32594  |  earlier

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Might as well invest in them then, right? If they fail, the US government will be bankrupt, right?

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  1. Fannie and Freddie Mac will probably not fail, but that only means that they will honor their debt. The government will take care of the payments. Well, that means you and I and all other taxpayers will take care of that. But this does not mean that investing in the stock is necessarily a good idea. The value of the equity can still go to zero even if these companies honor their debts with government guarantees.

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