In recent times, the status of our economy has really been questioned. From the weakening of the American dollar to an increasing amount of debt, the countries current financial crisis has continued to dwell and even breed. Now, in recent weeks, concerns are being rose up about the status of our banks. From local institutions to corporate lending companies, companies are feeling the effect all across the board.
One of the nations largest companies to close in recent history, Indymac, symbolizes the sorry state of our economy and the dwindling industry. This company contained almost 32 billion dollars in assets off of savings and loans accounts. In addition to, it was also connected to the Countrywide Financial Corporation. Such a giant taking a K. O is not good news for us American citizens and for the companies that utilize us to make profit.
Two other financial giants that are in much trouble is Fannie Mae and Freddie Mac:
Fannie Mae is a government sponsored organization also known as the Federal National Mortgage Association and is said to own approximately (with the help of Freddy Mac) half of the US trillion and trillions dollar mortgage market. Initially created in 1938 as part of Franklin Roosevelts New Deal program in an effort to provide stability to the nations economy and mortgage market, Fannie Mae has since been converted to a private organization.
Also known as the Federal Home Loan Mortgage Corporation, Freddy Mac is also a government sponsored company which holds major responsibilities when it comes to authorizing loans and loan guarantees. Founded in 1970, Freddy Mac was in a sense added to provide competition to Fannie Mae, which from 1938 to 1968 held a monopoly over the mortgage market. Thus, the US government chartered the corporation in order to expand the mortgage market and provide multiple options to homeowners.
When you see the importance of these companies and how they hold such a strong foundation when it comes to the American economy and the mortgage market, one has to ask what is going on when these companies are reportedly in risk of closing and needs government assistance to stay afloat.
Despite the fact the US has issued the FDIC act to insure our money within savings accounts it has been reportedly stated that there is approximately only 50 billion dollars within the account. Including the fact that Indymac, which recently closed will eat up anywhere up to 8 billion dollars of the fund the government can be in trouble and might have to find new ways of backing up the savings accounts of millions of consumers.
Industry analysts have stated that this economic pinch might effect anywhere up to 90 banks. Even though lists compiled by experts have not been publicized stock markets and traders have definitely been paying attention and trading and buying to keep in step with the recent rumbles within the business and financial world.
When looking into the future, we have to ask ourselves what is the future for our economy. The Great Depression, is that a possibility? Will our stock markets shut down and trading with foreign countries cease, one has to ponder. Maybe its safe to say that we might have to start keeping our funds with us where we sleep at, under our mattress!
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