U.S. Mortgage Giants Fannie Mae and Freddie Mac Are Broke
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America is relying on Fannie Mae & Freddie Mac to bail out the troubled housing market, yet Fannie and Freddie have needed bailouts of their own. Bose George, an analyst at Keefe, Bruyette & Woods, has reported that the quasi government mortgage giants have zero value to common shareholders. After nearly $100 billion government bailout, many believe these two will need the full $400 billion that the Treasury has already pledged if they are to survive.
Mr. George believes that Fannie & Freddy will still be heavily indebted to the Government even ten year from now.
This doesn’t mean Fannie Mae or Freddie Mac will go out of business. The government can’t afford to let that happen, financial experts say, because mortgage markets would break down. These two firms end up owning or providing a guarantee on most US home loans.
A separate report this month, by the Government Accountability Office, outlined other options for what comes after conservatorship for Fannie and Freddie:
- Nationalize them and operate as a government agency.
- Reconstitute them as they were before the crisis, with better regulation.
- Privatize or terminate them.
Many conservatives argue that private markets can do Fannie Mae and Freddie Mac’s job.
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I am not a conspiracy theorist but I do believe Obama is a Marxist. He does not have the dictatorial power to implement the change he believes is necessary to redistribute wealth and equalize outcomes but he will use the existing levers of power to incrementalize his goals by fostering socialized medicine and punitive tax policies on the nation. When voters are worried about their jobs and income, they will set aside their liberty for comfort, especially when they think someone else is paying for it.
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Of course, and always, socialistic solutions. This kind of denial socialist thinking is at the very core of our problems. Affordable housing brought this mess about while the social engineers in congress were busy giving other peoples money away so that community restoration could become the magic elixir for the poor.
Why can’t you people ever understand that the poor will always be with us for a variety of reasons. Underprivileged…no. Undereducated…no. Undermotivated…yes. And the more your give other peoples money to the poor, the more poor you are going to have.
However, not matter how desperate and troubled an economy gets, it is always the fault of the capitalists. Hell, if weren’t for the capitalists we would all still be living in caves…uh, perhaps that is what you secretly desire.
“In 2004, Republicans held an oversight hearing on Freddie Mae and Fannie Mac. They warned us about this crisis back then, but Barney Frank, Maxine Waters, and other Democrats charged racism. Franklin Raines, the disgraced thief Democrat CEO of Fannie Mae, insisted the loans were “riskless”.” There’s plenty of video out there on this showing this fact.
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Homes will always be unaffordable to the average person in high priced CA as long as government subsidize home owners in the form of mortgage tax deductions, and Fannie Mae bailouts. Remove the interest tax deduction and watch the prices correct 50%. This place a bottom on home prices and increase home ownership than further government meddling. The issue is affordability, not unemployment. Prices are still too high due to government tax policies and bad lending practices.
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FANNIE MAE AND FREDDI MAC are the public companies traded on stock market. When there was profit the investors got the profit. When they are in loss WHY Taxpayers are asked to pay for the loss.
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FANNIE MAE AND FREDDI MAC should NOT be bailed out.
They are raising interest rates to shore up the banks. They don’t care diddlysquat about the struggling homeowners.
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As to Fannie & Freddy …the only sane course now is to make the de facto nationalization official. In which case there is no reason to have two entities. Freddie was created in the first place to provide some semblance of competition for Fannie.
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