Free Markets, Free People

The other shoe drops – Fannie Mae asks for $8.4 billion

A few days after Freddie Mac requested $10.6 billion, Fannie Mae has asked for $8.4 billion:

Fannie Mae requested another $8.4 billion from the federal government on Monday, saying that due to trends in the housing and financial markets, the company expects its deficits to continue.

The government-controlled mortgage giant announced Monday that it lost $13.1 billion applicable to common shareholders in the first quarter of 2010.

The request cames just four days after Fannie’s twin Freddie Mac also asked for a handout – to the tune of $10.6 billion – after posting an $8 billion quarterly loss.

Don’t forget, this is off budget money – even though it adds to the deficit, its not counted – yeah, you figure it out.

Also remember that while Democrats rail against Wall Street and it’s culpability in the financial collapse, it was Freddie and Fannie which were implementing the policy of the US Government (namely the Community Reinvestment act which essentially gave them license to push and buy up sub-prime mortgages).

Finally this:

In using Fannie and Freddie to prop up the mortgage market, the government in December lifted a $200 billion limit on their bailouts, essentially giving the twin housing lenders a blank check. Fannie Mae has already received $76.2 billion from the federal government and Freddie has gotten $50.7 billion.

Both of these institutions, controlled totally by government, are still loaded to the gills with toxic assets. And government is using the smoke screen of financial regulation to attempt to hide the problems that Freddie and Fanny have. Blank check – nice fix, eh? It’s your pocket into which these two organizations are dipping.


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7 Responses to The other shoe drops – Fannie Mae asks for $8.4 billion

  • [Congressman Barney] Frank also wrote that the Republican proposal to abolish Freddie and Fannie would remove an important government prop to the housing market. “It is the unanimous view of every profit and nonprofit entity concerned with the housing market in the United States that simply to abolish Fannie and Freddie, as the Republicans are proposing in the House bill, and not do anything to replace the functions they are now performing with a conservatorship, would be a disaster for housing, and therefore for the economy as a whole,” Frank said…
    “This is an important point that has to be repeated – as Fannie and Freddie operate today, going forward, there is no loss,” Frank wrote.

    These statements by Frank came one day before Freddie Mac requested an additional government bailout of $10.6 billion to cover losses incurred in the first quarter.  Now Fannie Mae is asking for $8.4 billion.  Will Barney Frank change his tune now ?

    • Barney is a slippery one.   His claim is that Fannie and Freddie have tightened their standards so there will be no n new losses going forward.  So, he can blame any losses on old loans and continue to claim no “new” losses going forward.  It will be hard to prove him wrong.

    • I am back to add this post by Karl Denninger:
      He noticed this in the announcement:
      “When Treasury provides the requested funds, the aggregate liquidation preference on the senior preferred stock will be $84.6billion, which will require an annualized dividend of approximately $8.5 billion. This amount exceeds our reported annual net income for each of the last eight fiscal years, in most cases by a significant margin.”
      In other words, Karl points out, “”We do not earn enough in a quarter to pay the dividend – that is, the interest on the borrowed money.“.  Nor, will they in the foreseeable future.

  • The government-controlled mortgage giant

    Just imagine the damage the government could do if it also controlled the nation’s health care!

  • If the American people needed a poster child for ONE reason why not to let Big Government handle anything involving money; this would be it.
    From the incompetency, the malfeasance, the lies, the cronyism, the misrepresentation, right down to the millions in bonuses rewarding paramount failure, this is the preverbal “shinning turd on a pedestal”. All of the crime, graft and built-in failure; a guaranteed result from “income redistribution” is here on display.
    Cut to Bwarney Fwrank: “Fannie & Freddie are solvent, they are a model of how a government agencies should be run” -Yeah, if you’re a hack and a thief.

    • Barney is from Massachusetts. In Mass., this IS  how a gov’t. agency is run.

    • “Yeah, if you’re a hack and a thief.”

      Or a Mass. legislator or bureaucrat, or their families and friends.
      But I redundize.