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Tell Me Again Why Freddie Mac

And Fannie Mae are not included in the big Financial Reform Bill? I am just curious since they helped create this economic situation in which we find ourselves, and have drained billions of dollars from the coffers over the past couple of years. Now they want MORE.

Oh, yeah – Freddie Mac is asking for TEN Billion Dollars. I reckon they just want to add it to their tab:

ABC News’ Matthew Jaffe reports:

Government-backed mortgage giant Freddie Mac today asked for $10.6 billion in additional federal aid after reporting a loss of $8 billion in the first three months of this year.

To date Freddie Mac has been provided with around $51 billion in government funds. The new aid would bring the total assistance to the lender to over $61 billion.

Late last year the Treasury Department essentially agreed to provide a blank check to Freddie Mac and fellow government-backed lender Fannie Mae when the agency controversially removed the cap on federal support for the lenders.


A “blank check”? That is what Geithner wants to give Freddie and Fannie? I reckon that’s what happens when you have someone in charge who can’t even fill out his own tax forms properly (or, as I like to say, a Tax cheat). Some folks aren’t happy about it, though:

Republicans have blasted the administration for that move, as well as for not putting forth a plan to overhaul the government-sponsored enterprises. Thus far the administration’s only action has been the April 14 release of a series of questions for public comment on what to do with the mortgage giants.

In addition, Treasury Secretary Tim Geithner has acknowledged that the government expects to suffer “very substantial losses” on its investments in the lenders, with recent estimates ranging around a minimum of $85 billion.

Well, that’s just jake – “a minimum of $85 billion.” That’s our money, folks.

And let’s not leave Fannie Mae out of this mix. Oh, no – now Fannie is asking for some more cash, too, a cool for $8.4 Billion more?:

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

The government-controlled mortgage giant said it lost $13.1 billion applicable to common shareholders in the first quarter of 2010. In the year-earlier quarter, Fannie suffered a $23.2 billion loss, but an accounting change makes comparing the year-over-year losses difficult.

Fannie’s request for more federal funds comes 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.

In using Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) 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.

“In the first quarter, we continued to serve as a leading source of liquidity to the mortgage market, and we made solid progress in our ongoing efforts to keep people in their homes,” Fannie Mae President and CEO Mike Williams, said in a press release.

Just to recap, Fannie Mae and Freddie Mac were largely responsible for bringing down the housing market (click HERE to read the rest of the article).

Yes, indeedy, so no doubt the new Finance Reform Bill begins with Fannie and Freddie, right? Oh, so wrong. Chris Dodd, who benefited mightily from Fannie Mae and Countrywide says, “Nooooooooo.” Dodd thinks it should wait:

Sen. Chris Dodd (D-Conn.) said Friday that legislation to address troubled mortgage lenders Fannie Mae and Freddie Mac will have to come after the current financial-reform effort.

Fannie and Freddie, which are known as “government-sponsored enterprises” (GSEs), have been a lightning rod for criticism of Democrats during the financial reform debate.

Dodd, who is chairman of the Banking Committee and has led the effort to craft a financial regulatory reform bill, said that there was not enough room in the legislation for rules covering Fannie and Freddie.

“Fannie and Freddie and the whole GSE system and it’s a great question and a legitimate one in desperate need of reform,” he said on CNBC. “But candidly there’s only so much I could only take on with this bill, and so that comes up. But not in this round. It’s in the next wave here we have to deal with GSEs.”

Well, sure, that makes sense, right? If you live in Upside-Down World, anyway (click HERE to read the rest). What a glaring, blatant, prop-up for those two entities that have done SO much to destroy the housing market. Unbelievable.

Frankly, I think this is a dereliction of duty on behalf of our Congress people. They refuse to hold accountable the very companies who wreaked havoc with our economy. They are in collusion with them. Even worse, they continue to throw money down the money hole.

I have used this video before, but it seems mighty timely given the requests of Fannie and Freddie (Onion video alert):


In The Know: Should The Government Stop Dumping Money Into A Giant Hole?

If only this were a joke…

  • Fannie and Freddie

    uh, precisely how have we “done SO much to destroy the housing market”?  We are currently supplying the funds for 97% of home mortgages made in the 1st quarter of this year.  We are saving the housing market, and we are paying for the privilege.

    Goldman Sachs, Bank of America, and others that received tarp have basically used those funds to purchase the treasuries/bonds that support tarp in the first place.  They are being charged less interest for tarp they received, than what the government is paying THEM to purchase the aforementioned treasuries/bonds. 

    We, Fannie and Freddie, are paying 10% interest on every dollar coming to us.  That comes out to be more than we’ve made except for one of our best years ever.  And we’ve paid it.  It turns out that this 10% interest may be what causes us to ask for more money, in essence trapping us in debt to you, the taxpayers.

    One fine gentleman out of Texas, Kenny Marchant, has this in mind. 

    “The dividend payments add to Fannie and Freddie’s debt, giving the exchanges a peculiar circular nature. Fannie and Freddie are essentially paying money to the government from money the government loans to the two companies.

    The dividend payments have received scrutiny from GOP Rep. Kenny Marchant (Texas), who sits on the House Financial Services Committee.
    Marchant, who said he’s heard Fannie and Freddie officials chafe about the arrangement in meetings he has requested with the companies, is worried the high dividend payments will make it more difficult for the two companies to pay back taxpayers.

      Marchant suggests setting interest on the loans from the federal government at something close to the 3 percent rate for interagency exchanges. He’d also set up a structure to ensure the companies pay off their debt to taxpayers before shareholders could see a return. ”

    Read all of it here: 

    http://thehill.com/homenews/house/96053-payments-burden-fannie-freddie

    I’m glad this guy is on the financial committee.

    You the taxpayers, who we would like to point out are also in many cases, home-owners, can thank us for the ~5% 30-yr fixed interest loan.  If we did not exist, such would not be the industry standard.  If we no longer exist, you can bet your sweet-tea that whatever private parties come back into it (after running off like little girls), will squeeze you for every penny.  5-yr 10%ARM (adjustable rate mortgage, with 10% for starters) will be the new norm, as it is in Britain today.  In other words, if you can’t pay off your mortgage in 5 years, you don’t buy.

    So give us a hand, so we may continue to give you a hand.  We’re already paying you 10% interest.  cheers,

    fannie and freddie.

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  • TeakWood

    “my thoughts are, honestly, based on headlines and other people’s opinion.”

    That is the root of the problem.

  • prime obot

    Thank you too, Rev. Amy. 

  • Rabble Rouser Rev. Amy

    Prime, Ferd wrote that response to me before you wrote yours, just so you know.

    And honestly, I appreciate your response.  I really do not mind respectful dialogue and discussion of the issues.  It’s when the name calling or belittling starts that I stop answering because there is no point. 

    I appreciate your willingness to say what you do and do not like abt Obama’s Administration.  Keeping an open mind is the best way to try and keep our government working FOR us, not against us.  Too often, it seems to be the latter, whether it was Bush/Cheney, or Obama/Biden (Pelosi, and Reid). 

    So, PO, this kind of dialogue is most welcome.  Thanks!

  • Rabble Rouser Rev. Amy

    Oh, I like those ideas, Senneth!!

  • prime obot

    As noted above, Ferd, I do not approve of it. I think Obama has been a total wimp on these very sensitive national security constitutional issues. 

  • prime obot

    Hi, sorry I didn’t come back to this thread yesterday. I am not an expert in these sorts of things, so my thoughts are, honestly, based on headlines and other people’s opinion, but having said that, I think Obama’s decisions in regard to many of these national security issues absolutely suck. He seems pretty clearly to buy into a strong executive authority argument that, while clearly nowhere near the sort of fascist model that Bush/Cheney promoted, at the very least is far beyond what I would want to see. Obama has turned the American ship of state around in a positive direction in many respects, but not in this one. His inclinations on national security (whether for practical or political reasons) have been one of the things that has most disappointed progressives, and I’m one of them, and I won’t pretend otherwise. Okay? 

    Now, one of the reasons I stopped coming to this site is that despite writing a paragraph like that, the hate chorus here will still inevitably accuse me of being a mindless Obot who just parrots the company line. Which gets unbelievably boring after awhile. But thank you for the cordial replies, Rev. Amy. And yes, I did come back largely to see whether you in particular had commented on Kagan yet, which yes, I acknowledge, is a compliment.  

  • Sassy

    Senators McCain and Gregg had an amendment placing Freddie and Fannie in the financial reform legislation.
    I saw part of the debate and later saw a report that the amendment failed.
    Does anyone know whether it was a party line vote?
    The democrats are intent on preserving these cash cows, and informed taxpayers who pay their mortgages should be livid about now! Tea Party time!

  • Onofre’s arm

    Oh oh, I left my computer on the NQ site earlier (before the problem) while I took care of some business, and when I returned, the screen was black and I couldn’t get anything to boot back up, so I manually shut the computer down. When I started it back up, my google chrome was not working, and I can’t seem to fix it. I’ll check to see if my Norton kicked in for some reason.

  • ~~JustMe~~

    Wow Onofre’s arm, oddly enough my Norton Virus kicked in earlier today, when I checked the reason said something about one of the links here at NQ. Maybe there is a bug in the system.
    Have you lost your graphic too?

  • Rabble Rouser Rev. Amy

    Oops – I don’t know why that posted twice.  Sorry!

    And that is an EXCELLENT idea, Ferd!!  Hmm.  But you know, whenever we point out things like that, like Obama backing all of these Bush policies (wiretapping, Faith based initiatives, etc.) that he had railed against previously, they just find ways to dismiss, excuse, or ignore it.  At least in my experience. 

    But let’s give it a go – so Prime Obot, what do you think abt Obama considering weaking Miranda?  Just wondering… :)

  • bablu###

    So, now I am getting angry, I have enough of what Pr.Obama Financial team is doing, and they are cashing  and cashing and instead tell Fredie-Mac to get lost, they are giving more and more. This is to much to swallow. I vote for Obama, but I am convince that I will not support Him in 2012. Watching Him and His so slow actioNs and a lot of talking, just is to much to take.No one is saying anything about GAS  PRICES GOING UP< that we just HAVE A NEW LAW  ABOUT GAS  PRIECES  , BUT NOTHING HAS CHANGE.MY PATIENTCE IS GETTING VERY THIN.

  • Onofre’s arm

    It seems my google chrome crashed earlier today, but I’m not sure that is the problem. I’ve had to switch over to my old browser to get access to this site. As selfish as this may sound, I hope I’m not the only one suffering this problem, because then it might not be a problem with just my desktop, and besides, misery loves company.

  • Linda C

    Has anyone thought that perhaps Fannie and Freddie are absorbing the toxic assets from the banks?  The TARP funds that were supposed to cover those toxic assets never went to the toxic assets at all.  Therfore what is a bank to do with them than to give them over to Fannie or Freddie.  Fannie and Freddie then come to the government to “cover their losses”, which of course were originally the banks toxic assets.  It clears tha bank balance by unoading all of the crap onto a guaranteed federal entity. Those toxic assets are now govered by the US taxpayer while our original tax dollars went to the banks to inject liquidity.  I am not so convince that “fannie and freddie cause all of our ill.  There is more to this story than what is just on the surface.  I would not be suprised if we are paying for this mess twice.

  • Joe

    If you have cash, BUY!!!

    I would even buy Freddie/Fannie.

    If Washington is not going to give us our money back for the Bush-Tarp/Obama-Stimulus spending bills, its up to us to buy and short the hell out of the market.  Wall St. guys do it every day… no reason why the average citizen can’t start profiting from all this financial turbulence.

  • Ferd Berfle

    RRRA: Just to take the wind out of his sails, you should ask PO what HE thinks about the Administration re-thinking Miranda and the 5th. Turnabout is fair play. Your turn to put PO to the rack, as it were.

  • Senneth

    I agree HonestLawyer.  I also think we should prosecute Franklin Raines and Jim Johnson and all the other Wall Street moguls and the politicians.  Put them in prison and seize their assets and use those assets.  A third to pay down our debts.  A third held in trust to fund SS and Medicare/Medicaid.  A third to operate our country.  Imagine if we arrested Soros, lock him up for good and seize his assets.  After all, it was Soros who gave us That One.

  • Rabble Rouser Rev. Amy

    Gosh, PO – you returned just to harass me?  Wow!  I suppose that’s some kind of compliment. 

      :)

    And now back to the topic at hand – Freddie Mac, Fannie Mae, a blank check, billions odf dollars down the Money Hole…

  • Rabble Rouser Rev. Amy

    Gosh, PO – you returned just to harass me?  Wow!  I suppose that’s some kind of compliment.

    And now back to the topic at hand – Freddie Mac, Fannie Mae, a blank check, billions odf dollars down the Money Hole…

  • Rabble Rouser Rev. Amy

    I caught Forbes this morning talking abt this very issue (I wrote this post yesterday).  He said that the two companies should be made private, and broken into several different companies.  THat what they are doing now amounts to a monopoly.  Interesting.

  • Rabble Rouser Rev. Amy

    Oh, sounds good to me!  WHere do I sign up for that?  Do you think that those of us who actually paid off some of them can get reimbursed?  I would appreciate that, I can tell you!  :)

  • carol haka

    Interest rate cut across the board for all mortgages.  No requalifying, no fees, nothing.

    It is easy, fair and will free up a zillion dollars for recovery.

    :-D

  • prime obot

    Yeah I know, thread hijacking is rude, and after I promised never to return, no less. But I just read this long article about Elena Kagan and I just couldn’t stop wondering how the NQ writers — especially RRRA — would find a way to criticize this nomination. Amy, just wanted you to know I’ll be checking in and eagerly await your post on the subject. 

  • Rabble Rouser Rev. Amy

    I know, right?  Sigh…

  • Rabble Rouser Rev. Amy

    Mel, I think some other folks have had some trouble with it today.  Some little gremlins must be getting in there…Hopefully, things have settled down.

    And thanks, Mel!

  • getfitnow

    There’s a long list of peopl and events that need to be investigated, both criminally and civilly and let the prosecution cards fall where they may. :)

  • Robb

    WTF does that have to with the above post?Take your B.S. elsewhere Prime Dumdass.

  • Tricia

    That video is very clever–right, if only it was just a joke.

  • prime obot

    rev amy, i’m looking forward to hearing what you think of the Kagan nomination. 

  • Rabble Rouser Rev. Amy

    Excellent idea, oowawa – I mean, really – instead of polluting the ocean with trash, let’s just use dollars!! 

  • Rabble Rouser Rev. Amy

    How abt dealing with Fannie and Freddie NOW instead of down the road?  They are literally costin gus BILLIONS of dollars, and have a blank check from the government (one of the little things they slipped in with the stimulus bill).  How abt shutting that down, for starters?

  • jbjd

    Diana, I like this idea of cancelling out student loans.  Between that, and the rebate my federal legislators owe me for performing constituent services for which they are paid $174,000, we can call us even!

  • Diana

    How about gov just cancels student loan debt. They throw the money away anyway… Just cancel the loan debt dudes… Thanks or better yet send me 10 million dollars and I’ll just turn around and write a check fir the remainder of that loan I owe ya. Of course if I’m nice enough to pay back that loan (with a small portion of that 10 mil you sent me), I think I deserve another 5 mil next year. Okay? Okay.

  • mel in texas

    For awhile I couldn’t get this site to come up. Not sure what was going on.
    This is my sanity dose.

  • Mac

    Amy, what do you suggest we do?

  • honestlawyermostly

    Thanks, Rev. Amy.  Great post and video, but if I might venture a different take…
    I think Sen. Dodd should take his bill and burn it along with every other piece of legislation that is trotted out to deal with whatever the current crisis is.  In my occasional wanderings through federal law (not to mention state law), I have stumbled over what seems to me to be an abundant collection of statutes (most of which include federal agencies) that if enforced would have prevented or at least punished those responsible for (a) the savings and loan ”crisis” of the 1980s, (b) Medicare fraud and abuse, (c) the Wall Street ripoff, (d) Toyota’s gas pedal, (e) the BP oil disaster, (f) the election of George Bush (the first time) and, dare I say, (g) illegal immigration.  Name the problem.  It’s a safe bet we already have a law or a regulation to deal with it.  We have enough statutes and federal regulations right now to fry Fannie and Freddie and those who ran them into the ground.  I agree completely that Dodd’s bill should include Fannie and Freddie and his excuse as to why it does not is ridiculous.  Even so, with or without Fannie and Freddie, the bill is window dressing for a corrupt politician anxious to keep people from looking in so he can continue to pretend like he cares and is doing something. 

  • oowawa

    Re: The Money Hole–Funny Video!

    But I would suggest, that instead of dumping all of that money down “the money hole” (even if it is a time-honored tradition), we really put it to good use and shoot it down a pipe into the gulf-oil-leak in order to plug up the flow.  Problem is–all this “money” is really only keystrokes on a computer keyboard and has no substantial existence at all.  We can’t really plug anything real with an imaginary quantity.  But if we really want to destroy our imaginary money in grand fashion, we can load it all into an imaginary warpspeed spaceship and shoot it into the giant black hole at the heart of the milky way galaxy.

  • oowawa

    More on Fannie:

    http://market-ticker.denninger.net/archives/2301-The-Bankrupt-Gets-More-Bankrupt-Fannie.html

    The conclusion of this helps me with my financial “planning”:

    “But in the Ponziconomy, where nobody has to pay any debts (ever), a new economy to which Americans should become completely aware and attuned to (along with acting themselves in this fashion), since they are now being tapped to pay off the debt of default European banks in the name of “Euro Stability”, no such reaction is forthcoming.
    One would hope that Americans recognize this “new normal” and take it into account when deciding whether to pay their debts for things such as homes, automobiles and credit cards.
    After all if it’s good for Fannie and European Banks, it’s good for you, right?

  • kenoshamarge

    Dodd may be reluctant to step on some Democratic toes since there are several videos of Barney Frank and Maxine Waters Pooh-poohing the idea that there was anything wrong with Fannie and Freddie.

    Much easier and better to keep throwing punches at those evil Wall Street types that everyone loves to hate. Problem for Dodd and the Dems is that a whole lot of voters are coming to loathe their elected officials just as much as the Wall Street types.

    Where is the LSM on this story? Guess I’ll have to keep watching FOX if I want to see any coverage.

    Thanks for this RRRA. I was afraid no one was going to cover this important story.