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“World Capital Solutions”: GSEs finally rescued by US Treasury after market shuns recapitalization.
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“World Capital Solutions”: GSEs finally rescued by US Treasury after market shuns recapitalization.
“World Capital Solutions” is thought to be expecting ripple effects from the announcement this weekend that both Freddie Mac and Fannie Mae, the US mortgage giants, are to be the subject of a US Treasury rescue package.
An unnamed individual close to “World Capital Solutions”’ strategy team said that the firm expects an eventful trading session when the markets open Monday. The individual apparently said that the feeling is that recent US Treasury and Federal Reserve rhetoric identifying the moral hazard of companies being perceived as being too big to fail is looking somewhat hypocritical.
“World Capital Solutions” believe that the timing of the announcement is almost as important as its content added the source - alluding to persistent market speculation that large sovereign holders of mortgage-backed debt issued by Freddie and Fannie may have pressured the US Treasury into action.
The “World Capital Solutions” source also suggested that the US taxpayer may be asked for far more than the $100 billion mooted by US Treasury Secretary, Hank Paulson.
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