Happy New Year! The Obama administration won’t disclose how much of our money Fannie Mae and Freddie Mac are losing, so Peter Wallison from the American Enterprise Institute crunched the numbers. It’s not good.
Bloomberg: “The situation is they are losing gobs of money, up to $400 billion in mortgages,” Wallison said in a Bloomberg Television interview. The Treasury Department recognized last week that losses will be more than $400 billion when it raised its limit on federal support for the two government-sponsored enterprises, he said.
The U.S. seized the two mortgage financiers in 2008 as the government struggled to prevent a meltdown of the financial system. The debt of Fannie Mae, Freddie Mac and the Federal Home Loan Banks grew an average of $184 billion annually from 1998 to 2008, helping fuel a bubble that drove home prices up by 107 percent between 2000 and mid-2006, according to the S&P/Case- Shiller home-price index.
The Treasury said on Dec. 24 it would provide an unlimited amount of assistance to the companies as needed for the next three years to alleviate market concern that the government lifeline for Fannie Mae and Freddie Mac, the largest source of money for U.S. home loans, could lapse or be exhausted.
Lax regulation of Fannie Mae and Freddie Mac led to the mortgage companies taking on too many risky loans, Wallison said.
“It turns out it was impossible to regulate them,” he said. “They were too powerful.” He said no one knows how much will be needed to keep the companies solvent. …
Between Fannie and Freddie, and the foreclosure prevention program that cost what, about $75 Billion, couldn’t we just pay off every American’s mortgage and call it a day? I know, it sounds insane, but it makes more sense than what we’re seeing. I guess if they just bought every American a house that would put a lot of the bureaucrats onto the unemployment line, and we can’t have that now, can we.
Just remember whose money it is their losing – your’s and mine. They’re making suckers out of all of us.
H/T Michigan
“it would provide an unlimited amount of assistance”
Really? Unlimited? By who’s authority? Unlimited….unlimited…wow. Pitchforks are being sharpened….
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This makes Enron look like piggy bank theft. How much are we paying the Fannie and Freddie administrators, who are their direct supervisors and why is this being tolerated? It wouldn’t surprise me to find bonuses being handed out. Where I come from, keeping your job and getting a bonus equated to doing well. Wow, am I out of touch.
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This is merely a continuation of what was the cause of the recent real estate and financial troubles that prompted bailout programs from the Feds.
Government has NO business in financial ventures other than play a limited regulatory role.
Fanny and Freddie are about taking care of cronies and buying votes for Dems.
Bwarny Fwank and his ilk should be run out of office on a rail.
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Actually, Michigan, I’ve wondered about that–everyone I know from Michigan is a raging liberal (call themselves Democrats)—-are you an anomaly?? Are you LONELY and out of touch?? What is the conservative-liberal ratio in your state? I’m so glad you’re here….!
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LOL! I’m flattered. Thank you very much L5-3!
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