Early Briefing: Unprecedented Plan for Fannie, Freddie

*The federal government unveiled a broad program Sunday evening to bolster Fannie Mae and Freddie Mac, extending unprecedented support to the companies and proposing new authority to lend them money and even buy their stock.

Scrambling to announce the initiative before the trading week began, federal officials said they would allow the firms for the first time to borrow money from the Federal Reserve. Officials are also seeking permission from Congress to temporarily increase the amount the companies can borrow from the Treasury and enable the government to invest directly in the firms if conditions worsen.

*For years, Fannie Mae and its smaller sister, Freddie Mac, were destination workplaces in the Washington region. With a booming housing market and the implicit backing of the federal government, employees enjoyed high pay, bonuses and the promise of a prosperous retirement, thanks to the companies's high-flying stock prices.

Internally, it was considered near-betrayal for employees to sell their stock. A year ago, when both stocks were trading at near $60 per share, such loyalty made sense.
Today, it looks like a mistake.

*The worries driving last week's implosion of investor confidence have been the subject of countless warnings over many years. From a Washington think tank to the halls of Congress, from the Treasury to the Federal Reserve, from the Clinton administration to the Bush administration, critics of the government-sponsored mortgage giants have long argued that they were allowed to operate with financial cushions that were too thin to support their far-reaching financial risks.


Carlos Aragon at Radio Fiesta

*For years immigrant entrepreneurs have taken over small radio stations with relatively weak signals, providing what for many Caribbean and Latin American immigrants is a key source of information about their local communities, U.S. life and politics, and news from the homeland. When Carlos Aragon, a native of El Salvador, founded his Radio Fiesta six years ago on the second story of a strip mall in Woodbridge, he intended it to play just that role for Hispanics in Prince William County.

"The intention was to create a bridge between the Hispanic and the Anglo community, interviewing politicians and informing the community and creating a radio station that serves the community," Aragon said.

But these days the subprime mortgage meltdown has hit many Spanish-language radio stations hard.

*After Starbucks Coffee recently announced it was closing 600 stores, the questions started almost immediately -- for Howard Schultz, the man who turned the Seattle company into a coffee behemoth, and for Dale Roberts, the proprietor of the Java Shack, a tiny coffeehouse in Arlington.

"How is everything?" people asked Roberts, in somber tones. "I didn't realize things were so bad," they added. They asked whether he was going to survive, fearing he could be another caffeinated casualty of the high gas prices and shrinking wallets that Starbucks blames for its problems.

Roberts's answer to all the questions: "We're fine."

*Over the past 25 years, Chevy Chase-based Abacus Technology has evolved slowly but deliberately from a one-man, one-contract transportation logistics consultancy to a 500-person communications and information technology firm with jobs in 12 countries.

Its next transition may not be so low-key.

On Oct. 1, Abacus officially becomes the primary information and communications contractor for NASA's Kennedy Space Center. On Oct. 8, Abacus will oversee the countdown for its first NASA space shuttle launch.

*The Washington regional economy is holding up reasonably well, though local consumers are pulling back on large purchases and commercial real estate construction is weakening, said Jeffrey M. Lacker, president of the Federal Reserve Bank of Richmond.


Jeremy Carroll

*Alexandria's Top Quadrant has hired Jeremy Carroll as chief product architect.. He has math degree from Oxford and a PhD in computational linguistics and is a 16-year Hewlett-Packard veteran. He's a rock star in the math community for solving the 6-Venn triangle problem in 1999. He discusses math problems and his personal style.

By Terri Rupar  |  July 14, 2008; 5:00 AM ET  | Category:  Morning Brief
Previous: Will the Twin Tech Towns Find Common Ground? | Next: Booz Allen, Private Equity & Government Contractors

Comments

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The reason Freddie, Fanny, Sallie, and Uncle Joe are suffering is because of the sleeping giant that no one wants to touch: consumer debt. No one wants to touch it because many companies are earning massive profits off of the average consumers debt. Debt relief and management services that actually work such as http://www.relieveyourdebt.com are the enemy of their profits. Politicians don't want to touch the problem either, because it means enacting legislation that will hinder voters from impulse spending, and no politician wants to be seen as the reason you can't buy a 98" hi-def TV for your bathroom.

Posted by: Walter | July 14, 2008 4:09 PM

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