US looks at Fannie, Freddie contingency plans – Reuters (7/10/08):

The Bush administration has had discussions about contingency plans in the event that giant government-backed mortgage-lenders Fannie Mae and Freddie Mae falter, the Wall Street Journal reported on Wednesday.

Shares of the two companies have taken a beating recently on worries about whether they can withstand more losses and support housing as well as concerns that they might need to raise massive amounts of new capital.

The discussions have been going on for months as part of the Treasury Department’s normal planning, but have become more serious of late, the Journal said, citing three people familiar with the matter.

According to the paper, the government doesn’t expect Fannie and Freddie to fail and no bailout is imminent.

Depends on the definition of imminent, I imagine. And with wise and credible financial masters such as Hank Paulson and of course the President himself on the case, I’m sure we’ll all be fine. Especially everyone who doesn’t own a home; a bailout will give them all of the downside of homeownership while they still get to live in crappy studio apartments!

But since our market-worshiping leaders are so intent on nationalizing risk sheltering gamblers, why not take it all the way?

Nevada casinos had a bad month in May, winning $969.9 million from gamblers for a 15.2 percent drop compared with the same month a year earlier, a state report showed Thursday.

So that’s a billion, just in Nevada, in a down month. Throw in Atlantic City, the Gulf Coast, horse and dog tracks, slots, and church raffles, and multiply it over the course of the current housing boom, and we’re talking about some real money.

I eagerly await the socialization of these losses as well.