This is pure insanity. Anyone who thinks this isn’t going to come back to bite us is delusional.
The Wall Street Journal: It was another impressive three months at Fannie Mae, as Uncle Sam’s mortgage finance company reported a fourth quarter loss of $16.3 billion. That wasn’t quite as strong as the third quarter loss of $19.8 billion, but give Fannie’s managers credit for trying.
“Through this prolonged stress in the housing market, we are helping homeowners across the country, supporting affordable housing, and providing financing to keep the residential markets functioning,” declared Fannie president and CEO Mike Williams, in explaining the losses. It takes skill and determination to lose that much money, and Fannie seems up to the task.
Keep in mind that losing money is now Mr. Williams’s job. Fannie and its sibling Freddie Mac became wards of the Treasury in 2008, after years of denying that they posed any financial risk to taxpayers. But rather than wind them down, or at least limit their losses, the Obama Administration has ordered them to modify hundreds of thousands of mortgages in an attempt to avoid foreclosures.
The companies are doing this with gusto, adding to the losses they have on the subprime and “liar loans” they piled up during the housing bubble they did so much to create. According to Fannie’s 10K filing with the SEC, the company lost $26.4 billion in 2009 from participating in the Obama Administration’s Home Affordable Modification Program.
Of course, while the Democrats are pushing for increased financial regulation now, they’re going to hold off until next year before even thinking about any kind of reform for Fannie and Freddie, their favorite money laundering institutions.
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