Unlimited Liability For Freddie And Fannie Losses

[BigGator5]

Unlimited Liability For Freddie & Fannie Losses

Happy New Year, readers, but before we get on with the debates of 2010, there's still some ugly 2009 business to report: To wit, the Treasury's Christmas Eve taxpayer massacre lifting the $400 billion cap on potential losses for Fannie Mae and Freddie Mac as well as the limits on what the failed companies can borrow.

The Treasury is hoping no one notices, and no wonder. Taxpayers are continuing to buy senior preferred stock in the two firms to cover their growing losses - a combined $111 billion so far. When Treasury first bailed them out in September 2008, Congress put a $200 billion limit ($100 billion each) on federal assistance. Last year, the Treasury raised the potential commitment to $400 billion. Now the limit on taxpayer exposure is, well, who knows?

The firms have made clear that they may only be able to pay the preferred dividends they owe taxpayers by borrowing still more money... from taxpayers....

The loss cap is being lifted because the government has directed both companies to pursue money-losing strategies by modifying mortgages to prevent foreclosures. Most of their losses are still coming from subprime and Alt-A mortgage bets made during the boom, but Fannie reported last quarter that loan modifications resulted in $7.7 billion in losses, up from $2.2 billion the previous quarter.

The government wants taxpayers to think that these are profit-seeking companies being nursed back to health, like AIG. But at least AIG is trying to make money. Fan and Fred are now designed to lose money, transferring wealth from renters and homeowners to overextended borrowers.

Even better for the political class, much of this is being done off the government books. The White House budget office still doesn't fully account for Fannie and Freddie's spending as federal outlays, though Washington controls the companies. Nor does it include as part of the national debt the $5 trillion in mortgages - half the market - that the companies either own or guarantee. The companies have become Washington's ultimate off-balance-sheet vehicles, the political equivalent of Citigroup's SIVs, that are being used to subsidize and nationalize mortgage finance.

(snip)

That's why on Christmas Eve Treasury also rolled back a key requirement of the 2008 bailout - that Fan and Fred begin shrinking the portfolios of mortgages they own on their own account, which total a combined $1.5 trillion. Risk-taking will now increase, so that the government can once again follow Barney Frank's infamous advice that the companies "roll the dice" on subsidies for affordable housing.

Awesome.

*pours himself a tall Pan-Galactic Gargle Blaster*

 

[al_Ussa]

*blink*

 

[BigGator5]

I'm thinking of telling my grandmother about this deal. If my children and great-great-great-grandchildren are going to pay for all this, I should get her to take advantage of it now.

 

[BigGator5]

Anyone going to defend Obama?

 

[Frisco_Slug_Esq]

Barney Frank, September 11, 2008, saw no reason to suspect that Fannie and Freddie were in any danger and that the Bush administration was just "fear-mongerin'..."



Now his idea is that anyone of the clowns that he got into homes that they could not afford should have the rest of us pay their damned mortgages for them.

In this manner, America will be on a more sound, and more importantly, "FAIR" economic footing.

 

[Frisco_Slug_Esq]

Anyone going to defend Obama?

If you mean attack the Bush Administration and the "general Republican philosophy" that led to eight years of the worst American economy ever where only the fat cat financial types got richer while the rest of us got poorer, then we've already had going on a decade of that nonsense beginning with the Clinton recession of '99-'00 that was caused by a Republican Congress that hated poor people and Main Street and loved Goldman Sachs and its other Wall Street buddies...

 

[In_the_Nick_of_time]

If you mean attack the Bush Administration and the "general Republican philosophy" that led to eight years of the worst American economy ever where only the fat cat financial types got richer while the rest of us got poorer, then we've already had going on a decade of that nonsense beginning with the Clinton recession of '99-'00 that was caused by a Republican Congress that hated poor people and Main Street and loved Goldman Sachs and its other Wall Street buddies...

The UK and the US economies were/are based on the money that you will make tomorrow and not of the value of the assets you own.

We have been doing a tightrope walk for years. Finally somebody looked down.......

 

[Frisco_Slug_Esq]

The UK and the US economies were/are based on the money that you will make tomorrow and not of the value of the assets you own.

We have been doing a tightrope walk for years. Finally somebody looked down.......

Mark Steyn was talking about Europe and GDP yesterday as he sat in for Limbaugh and he pointed out that 20-30 years ago the US had 21% of world-wide GDP while Europe was at 40% (I think, may have been 30, but that seems too low to have stood out the way it did) but now Europe is down to 21%, or thereabouts too, and he concluded that because it happened so gradually and because you still have a residual infrastructure (grand buildings and all) that no one has really bothered to notice; clam-happy over UHC...

Thoughts?

 

[In_the_Nick_of_time]

Mark Steyn was talking about Europe and GDP yesterday as he sat in for Limbaugh and he pointed out that 20-30 years ago the US had 21% of world-wide GDP while Europe was at 40% (I think, may have been 30, but that seems too low to have stood out the way it did) but now Europe is down to 21%, or thereabouts too, and he concluded that because it happened so gradually and because you still have a residual infrastructure (grand buildings and all) that no one has really bothered to notice clam-happy over UHC...

Thoughts?

As long as those with influence make money why would they care?

We have given up on or sold out manufacturing in many sectors and tie ourself up in red tape in those remaining. Ultimately we buy from abroad. Anywhere as long as it is cheap.

Europe is a disaster to which we give huge amounts of money. This gets spent making the poorer richer and making the richer poorer. It is a huge, expensive beaurocracy which serves best those that are employed within.

I could say more but my blood boils.

 

[Frisco_Slug_Esq]

We are going down that dark path too...




Have been for some time, but now the Progressive Statists are, as we say, "putting the pedal to the metal..."



FairTax.org
[preliminary response to "you conservatives just say no and obstruct and you never have ANY answers..."]