Deathwatch

clipped from www.redstate.com About two weeks ago, I wrote in this space that some very large tectonic plates were starting to move far below sea level in the financial world. That was based on some unusual patterns I was seeing in the overnight repo and money markets. I guessed (but had no information to confirm) that whatever was in the breeze had something to do with Fannie Mae and Freddie Mac, the pseudo-private corporations that together own or guarantee about half of all US mortgages, and today account for about 70% of newly-originated mortgages. This weekend, there are many reports that Fannie and Freddie will have their managements and directors dismissed, their equity extinguished (or nearly so), and enter what's called a government conservatorship. In essence, the firms will be allowed to continue their current business operations, but under government control, and their shareholders will be wiped out.