Archive for the ‘Fannie Mae’ Category
Posted by Steve Markowitz on December 10, 2012
The Wall Street Journal reported on the compensation of high paid employees of Fannie Mae and Freddie Mac. Their high compensations indicate a significant problem with the greed of government and the employees who live off of it.
Through much of America’s history, working for the government was considered a public service. In exchange for this service, those that worked for the government received salaries below that paid for similar jobs in the private sector. However, these workers enjoyed greater job security. While the job security remains, many government workers now receive significantly higher total salaries and benefits than their counterparts in the private sector. No longer can this be considered “public service”
While previously independent, Fannie Mae and Freddie Mac have always enjoyed the financial backing of the US government. However, through mismanagement and the downturn in the economy, both had to be taken over by the US government four years ago and have cost taxpayers nearly $140 billion. While one might expect Fannie and Freddie managers to have financially suffered as a result of their mismanagement, that has not been the case.
According to the Journal, for 2011, approximately 330 employees at the vice president level receive a median pay of just under $390,000. The next level down that includes 1,650 employees considered “directors” had median pays of over $205,000. These two categories of approximately 2,000 employees accounted about one-sixth of these companies workforce. Adding insult to injury, the 90 highest-paid executives took home over $92 million in pay.
When questioned about the high salaries, a Fannie Mae spokesperson said: “Our employees are managing…significant risk in an operationally complex market. It is absolutely critical that our compensation is competitive in the market.” If compensation is a driving force behind a person’s decision to work for the government, then such positions are subject to as much corruption or predatory practices as found in their private counterparts. This coupled with the reality that government organizations have proven to be bureaucratic and inefficient demands their privatization.
The taxpayer funds dumped into Fannie Mae and Freddie Mac are no different than the bailout of the private banks, General Motors and others. It is a reward for those that have been inefficient and/or imprudent at the expense of those who have been more successful. Such bailouts have become the most destructive force against the American capitalism.
Posted in Fannie Mae | Tagged: Bailouts, Compensation, Fannie Mae, Freddie Mac, Public service, Salaries | Leave a Comment »
Posted by Steve Markowitz on August 17, 2012
The video below helps demonstrates Paul Ryan’s understanding of America’s debt problem and the related entitlement programs. In a September 2010 mini debate with Democratic National Committee chairperson, Debbie Wasserman-Shultz, Ryan refers to the unsustainable trajectory of the debt and entitlements. In typical Leftist rhetoric, Wasserman-Shultz ignores the argument and instead accuses Ryan of attempting to address the financial problems on the backs of the less fortunate.
Given the trajectory of America’s deficits and debt, without addressing the entitlements problems soon, the money will run out for funding them in the future. Democrats and some Republicans would continue kicking the can down the road on these serious issues to push them off to someone else’s watch. Paul Ryan has more character than that.
Posted in Entitlements, Fannie Mae | Tagged: Debt, Deficit, Entitlements, Ryan, Wasserman Schultz | Leave a Comment »
Posted by Steve Markowitz on May 25, 2012
On February 9, 2012 this Blog posted Housing Market Damaged by Ongoing Governmental Interventions concerning Fannie Mae and Freddie Mac and their roles in creating the housing market crash that led to 2008 global economic meltdown that is still ongoing. The ongoing housing downturn is the worst in since the Great Depression. United States government actions and interventions played a significant role in creating this mess.
In the 1934 the US government created the Federal Housing Authority. The FHA was a backstop for mortgages that led to lower borrowing costs, governmental subsidy to promote homeownership. The government’s actions were based the mistaken belief that home prices always increased making them a good investment for all Americans. The meltdown of 2008 proved this to be ridiculous thesis.
Like all governmental agencies, the FHA’s reach and authority increased with time. In 1977 Congress passed the Community Reinvestment Act promoting homeownership to lower income groups who could not afford mortgages. Then, in the 1990’s Congress pressured Fannie Mae and Freddie Mac to offer loans to even higher risk buyers to further promote home ownership. While the interventions were made for supposed noble reasons, their benefits mainly benefited the home building and real estate industries. In addition, the policies led to inflated home prices making them bad investments especially for those that purchased homes in more recent years, the very group the governmental actions were suppose you help.
Finally, the government under the Bush and Obama Administrations pursued a dangerous low interest rate policy to further increase demand and consumption of all types of goods, including housing. Like an addiction, this drug no longer offers a high and the economic downturn continues irrespective of additional interventions.
Those who believe in and promote(d) the government’s interventions are culpable for the mess we face today. Progressives understand this and therefore deflect by creating the false narrative that the macroeconomic malady is merely the result of greedy capitalists. The video submitted below by Blog reader John helps show the Left’s complicity in creating the housing bubble and subjecting taxpayers to huge losses at Freddie Mae and Fannie Mac. It also shows that in opposite of the Left’s narrative, it was they who stop the Republicans from further regulating Freddie and Fannie. Excerpts from our congressmen include:
- Richard Baker, Rep. Louisiana – He predicted Fannie and Freddie failure in 2004 and called calls for more regulations on them.
- Maxine Waters, Dem. California – She said that no problems existed at Fannie Mae and Freddie Mac under “outstanding leadership” of Mr. Franklin Raines and accused regulators of trying to fix something that wasn’t broke. Waters then praised Raines for exceeding GSE Performance and further attacks regulator for impeding affordable housing mission.
- Gregory Meeks, Dem. New York – Watch his irrational rant attacking a regulator trying to control Fannie and Freddie.
- Ed Royce, Rep. California – He pleads for more regulations on Fannie and Freddie.
- Lacy Clay, Dem. Missouri – “This hearing is about the political lynching of Franklin Raines” No problem with Freddie and Fannie soundness.
- Christopher Shays, Rep. Connecticut – Points out that that Fannie and Freddie were incredibly exempted from Sarbanes-Oxley act.
- Artur Davis, Dem. Alabama – Beats up on a regulator who attempted to put controls on Fannie and Freddie.
- Barney Frank, Dem. Mass. – Defended Freddie and Fannie incredibly stating that there were not issues with their “safety and soundness”.
- Don Manzullo, Rep. IL – Attacks Fannie and Freddie for skirting the rules so that they could pay huge bonuses to their executives.
Perhaps the worst character this sordid matter is Franklin Raines who headed Fannie Mae until being forced to retire in late 2004 after the SEC began investigating accounting irregularities. Raines, who received total salaries exceeding $90 million at Fannie is quoted: “These assets (houses) are so riskless, that their capital for holding them should be under 2%”. This incredible example of stupidity did not stop Barack Obama from looking to Raines for advice on the housing market.
For those who would question the Left’s culpability in creating the mortgage meltdown, the video concludes with Bill Clinton clearly stating that both he and the Democrats in Congress must accept responsibility in that they resisted any Republican efforts to tighten up of on Freddie Mac and Fannie Mae.
This story is one of stupidity, greed, and the failure of government. It has been buried by a mainstream media that no longer does any investigative journalism, especially if it may place Progressive policies at risk. The Leftist politicians who manipulated the housing market are just as guilty as the mortgage brokers and bankers who took advantage of their ill-conceived policies.
Posted in Fannie Mae, Housing Market | Tagged: Artur Davis, Barney Frank, Bill Clinton, Christopher Shays, Community Reinvestment Act, Democrats, Don Manzullo, Ed Royce, Fannie Mae, Federal Housing Administration, FHA, Franklin Raines, Freddie Mac, Gregory Meeks, Housing, Interest Rates, Lacy Clay, Maxine Waters, Republicans, Richard Baker | Leave a Comment »
Posted by Steve Markowitz on December 5, 2011
Last week Congressman Barney Frank, Democrat from Massachusetts, made a surprise announcement that he would not seek reelection. The motivation behind Frank’s decision is not yet public. While the Congressman may nearly have had enough after 30 years, he may also be retiring for less noble reasons such as the fear of losing the next election or the outing of some hidden skeleton in the closet.
As a Progressive, Frank attempted to portray himself as a man of the common folk. However, reality does not match that narrative. In fact, like many politicians on both sides of the aisle, Congressman Frank will leave a tarnished legacy relating to his involvement with Fannie Mae.
Frank and his Progressive pals, including Jimmy Johnson and Franklin Raines, played key roles in the creation of the housing bubble and its subsequent meltdown. Johnson, a lifelong Democrat, previously worked on Walter Mondale’s presidential campaign before becoming a managing director Lehman Brothers and later ran Fannie Mae.
Fannie Mae was established by Franklin Delano Roosevelt in 1938 to guarantee mortgages and promote housing loans. In 1968, Fannie Mae became a public company, thereby removing its debt from the federal government’s balance sheet. However, the government maintained its guarantor role. This accounting sleight-of-hand amounts to similar action that ultimately brought Enron down.
Another Democrat, Franklin Raines, was Johnson’s deputy at Fannie Mae and later became its CEO. Both Raines and Johnson received exorbitant salaries at Fannie Mae exceeding tens of millions of dollars.
Under Johnson, Fannie Mae was a willing partner with Wall Street in taking on outrageous risk that ultimately cost taxpayers tens of billions and caused a meltdown of the worldwide financial system. However, this history did not seem to trouble President-elect Obama who later on appointed Johnson to his vice presidential nomination committee. Johnson resigned three days later when his background at Fannie Mae became an issue, as well is some questionable loans he received from Countrywide, a player at the epicenter of the subprime mortgage mess.
By 2003, concerns were growing that Fannie Mae’s financial obligations and risky loans could cause systemic problems to America’s overall financial system. This prompted the Bush administration to propose that Fannie Mae be overseen by a division of the United States Treasury Department to set lending standards. Then Treasury Secretary John Snow informed the House Financial Services Committee that: ”There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises.”
The Bush Administration’s attempts to rein in Fannie Mae was fought by the financial industry lobby. One of its strong supporters was Congressman Barney Frank, a member of the House Financial Services Committee who then said:
- “I want to begin by saying that I am glad to consider the legislation, but I do not think we are facing any kind of a crisis. That is, in my view, the two government sponsored enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis.” …
- “I must say we have an interesting example of self-fulfilling prophecy. Some of the critics of Fannie Mae and Freddie Mac say that the problem is that the Federal Government is obligated to bail out people who might lose money in connection with them. I do not believe that we have any such obligation. …..But there is no guarantee, there is no explicit guarantee, there is no implicit guarantee, there is no wink-and-nod guarantee. Invest, and you are on your own.”
- “I believe that we, as the Federal Government, have probably done too little rather than too much to push them to meet the goals of affordable housing and to set reasonable goals.”
- “I think we see entities that are fundamentally sound financially and withstand some of the disastrous scenarios. And even if there were a problem, the Federal Government doesn’t bail them out. But the more pressure there is there, then the less I think we see in terms of affordable housing.”
At the very least, Frank’s decision relating to Fannie Mae was a colossal error. Fannie Mae subsequently had to be taken over by the US government at the cost of over $100 billion to US taxpayers. Had the regulations of Fannie Mae been implemented when requested, the financial meltdown may have been avoided. In addition, Frank had conflict of interest given that this is longtime partner, Herb Moses, worked at Fannie Mae at a job that Frank helped him obtain. Further, Frank’s mother received a $75,000 grant from Fannie Mae for her foundation. As they say, if the quacks like a duck it’s not an elephant.
Americans rightfully feel anger towards the banks and that played a role in the creation of the financial meltdown. In recent months Occupy Wall Street has become a vocal spokesmen of this anger. Some politicians on the Left have attempted to harness this movement for political gain. This is a risky game. Should Americans look under the covers just a bit, they will find that government, including both sides of the aisle, played roles in creating the crisis.
Posted in Barney Frank, Fannie Mae | Tagged: Banks, Barney Frank, Countrywide, Fannie Mae, Franklin Raines, Government, Herb Moses, Jimmy Johnson, Lehman Brothers, Obama, Progressives | Leave a Comment »
Posted by Steve Markowitz on February 11, 2011
The Obama Administration has unveiled an outline to ultimately unwind the government from mortgage giants Fannie Mae and Freddie Mac. Fannie and Freddie play key roles in financing the country’s $10 trillion mortgage market by purchasing mortgages from originators, then repackaging and selling them as securities. This financial wizardry is often referred to as securitization, a tool also used by investment banks. Securitization played a major role in creating the housing bubble, the original cause of the economy’s financial meltdown.
The Obama Administration’s attempts at lessening the government’s role in the mortgage market will lead to higher mortgage costs and less access to them for consumers. While the Administration’s actions are necessary economically, they will ultimately weaken housing demand and place additional downward pressure on prices. This is the conundrum the government finds itself.
The government’s housing market subsidies through mortgage backing and tax incentives helped overheat the housing market. Adding to the bubble was risky lending practices that came with government backed mortgages. In addition, the government pressured Fannie and Freddie to supply loans to people who could not afford them. Now in a down market the government is forced to retrench, a move that will likely exasperate the downward spiral.
Fannie and Freddie are examples of the unintended consequences of governmental interventions into the marketplace. Adding insult to injury, with the economic crisis the American taxpayers have been forced to bail out Fannie and Freddie, already stuck with a $134 billion bill that will likely get larger.
The idea behind Fannie and Freddie, assisting Americans in their quest to purchase a home, is a noble one. But, like most governmental programs, it led to consequences that have been quite severe and will take years to unwind.
The most efficient way to repair the damaged economy is via natural market forces where supply and demand will be allowed to find equilibrium. However, any solution including this one will involve pain, especially to those that over barrowed and over bought. This reality offers the opening that Progressives in Washington will use it to inflict even more governmental intervention on the economy in the name of compassion. Just like the interventions that caused the meltdown in the first place, these additional actions will inflict more damage to the overall economy. This cycle will be stopped, either by choice or when the interventions no longer supply the short-term fix to the economic addicts.
Posted in Fannie Mae, Governmental Intervention | Tagged: Fannie Mae, Freddie Mac, Home, Mort, Obama, Supply & Demand | Leave a Comment »
Posted by Steve Markowitz on July 18, 2010
It hasn’t been two years since the financial meltdown that included the Lehman Brothers’ failure and risky loans are already coming back.
It is generally agreed that the worse financial disaster since the Great Depression was caused by greed and imprudent investments, especially those related to debt financing. Perhaps the biggest example is Wall Street’s use of collateralization to sliced and dice bad mortgages and then selling them to investors as quality investments. This led to an overheating of the housing market, then the popping of the housing bubble, and finally the sup-prime mortgage catastrophe. The rest is history. The world’s financial system was in danger of a systemic breakdown, which caused governments to bail out banks and other intuitions.
While we will never know if the bailouts actually saved us from Armageddon, we do know that they saved many banks and investors from imprudent behavior. This reality has consequences, such as damaging the “moral hazard”. Banks and investors learned that if they bet big enough so as their failure has huge consequences to society, governments will come to their rescue.
Not surprisingly, banks are now going back to similar risky behavior that caused the original meltdown. The Wall Street Journal has reported the following examples:
- A 66-year-old retired phone-company worker in Brooklyn, NY is $33,000 in debt, earns $2,414 a month and filed for bankruptcy in June. Shortly before the filing, she received an offer from Capital One for a credit card even though they sued her in 2006 to recover $4,470 she owed them on a different card. The Capital One offer told the retiree: “At some point we lost you as a customer and we’d like to have you back.”
- An Illinois couple received six credit card offers since emerging from bankruptcy in June even though they still $73,000 in student loans.
- Credit-card issuers offered 84.8 million cards to subprime borrowers in the first half of 2010, almost double last year’s rate.
- 8% of new car loans in the latest quarter were to borrowers with the lowest credit scores, up from 6.2% in the previous year.
- AmeriCredit, a Subprime auto lender, informed investors that loan originations could be $900 million in the fourth quarter, over four-times the previous year’s volume.
- Fannie Mae, perhaps the largest villain in the subprime mortgage meltdown, is also back at it. Fannie was seized by the U.S. government in 2008 to avert failure. Fannie launched an initiative in January that allows some first-time home buyers to get a mortgage with as little as $1,000 down.
While it is too early to determine if increased loan activities to those with questionable credit worthiness will lead to another meltdown, it doesn’t feel right. The government intervened in markets and saved investors who made poor decisions from paying the bill. Now those same people are back with similar behavior. It doesn’t take a PhD in economics to know this is not good.
An appropriate closing paragraph to this posting is Fannie Mae’s response to questions about their $1,000 down mortgage offering. There justification for these mortgages is that Fannie faces limited risk because these mortgages then go through state agencies that have solid histories. This justification sounds suspiciously similar to the pitch that Wall Street gave for the collateralized mortgages that were then highly rated by bond rating agencies.
Posted in Bailouts, Fannie Mae, Moral Hazard | Tagged: AmeriCredit, Bailouts, Bankruptcy, Collateralized Debt, Credit, Fannie Mae, Great Depression, Housing Bubble, Lehman Brothers, loans, Moral Hazard, Risk, Subprime Mortgages, Wall Street | Leave a Comment »
Posted by Steve Markowitz on May 20, 2010
As the ongoing recession marches from one crisis to another, our politicians in Washington look for scapegoats. While their crosshairs have been focused on Wall Street Banks, who are not blameless, they should start by looking in the mirror.
Many, including this Blog, have pointed the finger at our government for its responsibility in sowing the seeds for the financial crisis that led to this recession. Governmental intervention in the markets was a primary cause of the subprime mortgage mess that led to the financial ongoing meltdown.
Heide Malhotra published an aritcle this week in The Epoch Times that discusses the government’s role stating:
- MyCommunityMortgage (MCM) loans, a product offered by Fannie Mae, was created to allow low income families who could not afford homes a way to purchase them. This program was Washington’s attempt to get more Americans into home ownership, i.e. social engineering.
- MCM helped low-income public service workers purchase homes with no down payment mortgages.
- Fannie’s MCM program came as the result of a study by the Federal Reserve Bank of Boston that indicated minorities were being discriminated against by lenders. However, in a 1998 report economists Stan J. Liebowitz and Theodore E. Day found the study flawed.
Malhotra quotes economist Eric Falkenstein: “Fannie Mae’s MyCommunityMortgage™ was at the forefront of the credit crisis, and had many sub-programs, all targeted at low income communities and borrowers.” This program was “doing what the private sector would not, serve the historically underserved.” In other words Fannie Mae made imprudent loans. They and the Progressives that promoted the program should have seen the train wreck coming.
Besides the international financial turmoil caused by MCM, Fannie Mae is insolvent with a negative net worth of $8.5 billion. They now request an additional government bailout of $8.4 billion. Out politicians are too tied up with culpability to pull the plug on the bailouts.
In recent weeks Congress has put Wall Street bankers on the hot seat with questions of dubious relevancy. Along with President Obama, they blame capitalism and greed as the root causes for the financial meltdown. Their protestations, why partially correct, are also designed to deflect from their responsibility in creating the biggest financial mess since the great depression. Had they and their Progressive associates not changed the charter of Fannie Mae to intervene in the social policy of home ownership, the meltdown would have never occurred and the bankers could not have acted on their greed.
The Knuckleheads in Washington continue to try additional interventions in the markets (i.e. bailouts) to cure problems that their initial interventions caused. Given that we are nearly two years into the crisis and the problems persist, it is evident that these Progressives haven’t learned from their mistakes.
As Einstein so ably said: “Insanity is defined as repeating the same behavior and expecting a different result“.
Posted in Fannie Mae, Free Markets, Governmental Intervention | Tagged: Bailouts, Capitalism, Crisis, Eric Falkenstein, Fannie Mae, Federal Reserve Bank of Boston, Financial, MCM, MyCommunityMortgage, Obama, Progressives, Scapegoat, Stan J. Liebowitz, Theodore E. Day, Wall Street Banks, Washington | Leave a Comment »
Posted by Steve Markowitz on April 22, 2010
Two stories were reported today relating to President Obama and the investment bank, Goldman Sachs. The one that got the most publicity was the President’s speech at Cooper Union College, lower Manhattan, NY. The President castigated the banking community in general, of which Goldman Sachs (GS) is the largest investment bank, with specific reference for their opposition to Obama’s proposed banking reforms. Forgetting for the moment the merits of any proposed reforms; is the President naive enough to expect bankers to back more regulations of their industry or was his speech mainly to get in on the now popular hunt for the scoundrels of the ongoing economic mess? Either way the speech was more befitting of a Community Organizer than the President of the United States.
If the President wants to go scoundrel hunting, yes, Wall Street is a place to look. However, he should not ignore the major role that government played in creating the financial meltdown. Had they not changed Fannie Mae’s and Freddie Mac’s charter to offer mortgages to those that could not afford them and had they not kept interest rates artificially low, the bubbles would not have been created and Wall Street would not have gotten so rich. Obama purposely ignores government’s role as this would bring attention to the illogic of his Progressive beliefs that we need even more of this failed governmental intervention.
The second Obama and Goldman Sachs story involved campaign money that Obama accepted from the same scoundrels, GS, in his run for the Presidency. GS employees donated $1 million to Obama’s campaign. In deciding not to return the money, Obama spokesman Hari Sevugan said:
“We make these decisions on a case-by-case basis, and in this case we have not accepted contributions from specific individuals accused of wrongdoing, nor have we advocated for positions that big Wall Street banks generally favor.”
How disingenuous and inconsistent of the President. At the Cooper Union College speech the President went after the entire banking industry, not just the perpetrators of wrongful acts. But, when it comes to the tainted funds that his campaign accepted from GS, he hides behind the claim that the people who gave the money have not individually “accused of wrongdoing”. Hmmmmm.
Let’s put the Goldman payments to the Obama campaign into perspective. According to the Wall Street Journal, since 1989, no company has donated more to Democrats than GS. In addition, the Company was the fourth-largest corporate source of campaign cash to Republicans during that same period. Smells funny? So you thought only Republicans were in bed with the fat-cats? So much for the “change” Obama promised us.
Obama has shown that he is from the kettle that brought us George W. Bush with a difference in style. Bush used the threat terrorism to justify his power grab. Obama uses Wall Street, Global Warming and potential economic calamites to grab his. The results are the same: more Washington trampling on our Constitution.
Posted in Banks, Constitution, Fannie Mae, Goldman Sachs, Governmental Intervention | Tagged: Bush, Campaign, Change, Community Organizer, Constitution, Cooper Union College, Democrats, Fannie Mae, Freddie Mac, Goldman Sachs, Hari Sevugan, Investment Banks, Mortages, President Obama, Progressives, Republicans, Wall Street | Leave a Comment »
Posted by Steve Markowitz on April 2, 2010
In its most recent report, Fannie Mae showed a loss of $72 billion for 2009. No problem, they just went to the US Treasury and tapped it for another $15.3 billion of Taxpayer money. That will bring the Fannie Mae bailout to date to mores than$76 billion. But what’s a mere $76 billion when we are running trillion dollar deficits?
Fannie Mae’s 2009 $72 billion loss exceeded its 2008 loss of $59 billion. Amazingly, even with these huge losses none at this government supported firms has been held accountable. Remember Bernie Madoff? His merely $18 billion rip-off got him a jail cell, were he belongs. Rip off taxpayers for over $130 billion in two years; no problem if you are in with the Progressives running Washington. They will make the excuses and let you sip rum in the islands enjoying your wealth created at taxpayers’ expense.
To add insult to injury, with the 2009 reported loss, Fannie Mae Chief Executive Michael Williams excused the loss with typical Progressive dribble. “Our overriding objective is keeping people in their homes whenever possible.” Hey Mr. Williams, that dribble deserves a few questions from us taxpayers. How about protecting taxpayer money as an overriding objective? Why would you want to force people to stay in homes in which they owe more than currently worth? Doesn’t that action guarantee their stay in the poor house for the long term?
Had it not been for Fannie Mae supporting bad loans, many of the folks with mortgages underwater would not be in the spot they now find themselves. One more question Mr. Williams: Is your objective for the good of the folks whose mortgages are underwater or to protect the knuckleheads that made these bad loans?
Fannie Mae’s role in created the housing bubble and the subsequent economic mess that the popped bubble created is huge. Just a few years ago the Progressives in Congress told us that Fannie Mae’s balance sheet and loan policies were sound. They either lied or had no idea what they were talking about. Either way, this is to be expected of governmental intervention. Should the Progressives be successful in nationalizing America’s healthcare system, we should expect the same results.
Posted in Fannie Mae, Progressives | Tagged: Bernie Madoff, Fannie Mae, Fannie Mae CEO, Michael Williams, Progressives, Taxpayers, US Treasury, Washington | 1 Comment »
Posted by Steve Markowitz on March 19, 2010
Fannie Mae’s $72 Billion 2009 Loss and the Progressives
In its most recent report, Fannie Mae showed a loss of $72 billion for 2009. No problem, they just went to the US Treasury and tapped it for another $15.3 billion of Taxpayer money. That will bring the Fannie Mae bailout to date to in excess of $76 billion. But what’s a mere $76 billion when we are running trillion dollar deficits?
The 2009 loss of $72 billion exceeded Fannie Mae’s 2008 loss of $59 billion. Amazingly, even with these huge losses none at these government supported firms has been held accountable. Remember Bernie Madoff? He bilked us out of a mere $50 billion or so and is in jail were he belongs. Rip off the taxpayers for much more; no problem if you are in with the Progressives running things in Washington. They make the excuses and let you sip rum in the islands enjoying the wealth created at taxpayer expense.
To add insult to injury, with the 2009 reported loss, Fannie Mae Chief Executive Michael Williams excused the loss with typical Progressive dribble. “Our overriding objective is keeping people in their homes whenever possible.” Hey Mr. Williams, how about protecting taxpayer money as an overriding objective? Why would you want to force people to stay in homes in which they owe more than it is worth? Doesn’t that just guarantee their stay in the poor house for the long term? Had it not been for Fannie Mae supporting bad loans, these folks would not be in the tight spot they now find themselves. Is your objective for the good of the folks whose mortgages are underwater or to protect the knuckleheads that made these bad loans in the first place?
Fannie Mae’s role in created the housing bubble and the subsequent economic mess that the popping bubble created is huge. Just a few years ago the Progressives in Congress told us that Fannie Mae’s balance sheet and loan policies were sound. They either lied or had no idea what they were talking about. Either way, this is to be expected of governmental intervention. Should the Progressives be successful in nationalizing America’s healthcare system, we should expect similar results.
Posted in Bailouts, Bubbles, Capitalism, Fannie Mae, Governmental Intervention, Progressives | Tagged: Bailout, Bernie Madoff, Deficit, Fannie Mae, Fannie Mae CEO, healthcare reform, Loss, Michael Williams, Progressives, Taxpayers, US Treasury | 1 Comment »