Fannie Mae Strikes Back - Asks Another US$ 8 Billion in Bailout from Feds

[Marie Louise von Preussen]

http://hotair.com/archives/2010/05/1...bailout-money/

This comes as no shock, of course, considering that its sister GSE asked for more than $10 billion on Thursday. Both Fannie Mae and Freddie Mac continue to lose money and continue to raid a Treasury line of credit funded by taxpayers to remain solvent. And oddly, this is something that apparently doesn’t concern Congress at all:

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 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.

In case you’re keeping score, that would bring Fannie’s cash to almost $85 billion. Freddie has spent over $50 billion. Under the original terms of the bailout, they would have already used more than half of the $200 billion Congress allocated for their rescue. The Obama administration lifted that limit in December, however, so neither GSE needs to worry about running out of cash. Only taxpayers have to worry about that, apparently.

The Senate is debating a financial reform bill that would supposedly curtail bailouts. However, the bill does nothing to free the American taxpayer from the obligations of Fannie and Freddie; in fact, the bill doesn’t even address the two lenders. Perhaps constituents should ask their Senators why that problem is being ignored while the two continue grabbing good money to rescue the bad.

Righhht!

Comments?

[Kanaric]

Comments?

Failed company has failed even after bailout, surprised i am not.

[Stavroforos]

So, is it still too big to fail?

[xcorps]

Yet another example of the of government subsidizing failure. You get more failure.

[Sphere]

I think the article is misleading, Fannie and Freddie were fully nationalized (i.e. they are owned by taxpayers), you cannot bail out a company you already own.

It has been public policy for decades that the GSE's were to backed by the full faith of the US government if a crisis arose. Thats why there are GSE's and not just E's. Personally I think they are a mistake as they promoted reckless behavior, but it is completely fickle to condemn them now for eating up government funds due to losses as that is the express purpose of the government guarantee that has been in place for ages.

Its like only complaining about the DH when David Ortiz gets a HR to beat your team in the bottom of the ninth with two outs, even though you were okay with it for the previous 8 innings.

[Sidmen]

I don't really understand this whole situation.

People are lending the US money to lend Frannie and Freddie money, right?

Why don't Frannie and Freddie just borrow their own damn money from where the US is borrowing it?

[danzig]

I agree it is misleading to lump Fannie and Freddie into the corp bailout thing given what they do and the fact that a large part of what they do was government encouraged (*cough* Clinton and his loan, loan, loan policy). So unfortunately yes we have to keep funneling them money. What else do you expect them to do? Fannie Mae accounts for like half of all US home mortgages, to the tune over 7 trillion dollars.

[Justice and Mercy]

What else do you expect them to do?

What is right. Let the corrupt temple collapse.

[Kanaric]

[So unfortunately yes we have to keep funneling them money. What else do you expect them to do? Fannie Mae accounts for like half of all US home mortgages, to the tune over 7 trillion dollars.

So what would happen if this company or whatever we should call it now were allowed to "fail"?

[danzig]

So what would happen if this company or whatever we should call it now were allowed to "fail"?

Chaos, war, famine, blood in the streets, civil war, global conflict? Seriously they are backed by a federal guarantee (though some argue whether legally the US is but its implied and assumed) so then taxpayers would be in whole to take on the 7 trillion.....so simply Fannie isnt "too big" to fail like say AIG or Citi is, it beyond that...it could never be allowed to fail.

[Sidmen]

I think the biggest problem is that nobody knows what would happen if the company failed completely.

Lots of Investors would loose money for sure, and lots of homeowners would probably loose their homes and/or find that their debts have disappeared.

These companies are a prime example of why companies shouldn't be allowed to grow that large.

[Justice and Mercy]

I think the biggest problem is that nobody knows what would happen if the company failed completely.

Lots of Investors would loose money for sure, and lots of homeowners would probably loose their homes and/or find that their debts have disappeared.

These companies are a prime example of why companies shouldn't be allowed to grow that large.

"Allowed"?

They were what they were by design, as they are now.

[Sidmen]

"Allowed"?

They were what they were by design, as they are now.

Is this supposed to support my opinion, object to my opinion, or just expand on my opinion. Can't tell.

[Kanaric]

I think the biggest problem is that nobody knows what would happen if the company failed completely.

Lots of Investors would loose money for sure, and lots of homeowners would probably loose their homes and/or find that their debts have disappeared.

These companies are a prime example of why companies shouldn't be allowed to grow that large.

Or grow like a cancer. If it was cut early when problems were first around it would of sucked less life out of the economy and situation than if we keep it around.

I'm betting if this were left to die we would see immediate effects, sure, however we would recover like anything. I doubt this is the a tourniquet for the economy and if we left it go we will bleed to death. Might as well accept this limb as a loss.

[Sphere]

Chaos, war, famine, blood in the streets, civil war, global conflict? Seriously they are backed by a federal guarantee (though some argue whether legally the US is but its implied and assumed) so then taxpayers would be in whole to take on the 7 trillion.....so simply Fannie isnt "too big" to fail like say AIG or Citi is, it beyond that...it could never be allowed to fail.

It would be technically possible to liquidate Fannie & Freddie without the US Government making good on all the debt, but at this point their debt is considered more or less part of the National Debt, and so it would be see as a partial default of the United States which is out of the question. Though from what I've read Fannie & Freddie are out of the woods at this point and have only drawn on half the Federal funds thus far provided. More than likely all the GSE's are going to get a major makeover whenever congress gets around to it, so until then its essentially cruise control under the government conservatorship.

[danzig]

It would be technically possible to liquidate Fannie & Freddie without the US Government making good on all the debt, but at this point their debt is considered more or less part of the National Debt, and so it would be see as a partial default of the United States which is out of the question. Though from what I've read Fannie & Freddie are out of the woods at this point and have only drawn on half the Federal funds thus far provided. More than likely all the GSE's are going to get a major makeover whenever congress gets around to it, so until then its essentially cruise control under the government conservatorship.

Which is why I dont get why people are fussing about this. US goverment allocated what 200billion to them and they are just reaching half that now and for the most part the worst of the crisis is over. Combine this with the fact Fannie Mae isnt bailing out some corp but actually protecting the interest of americans because it holds half this countries mortages. If feds are going to bail anything out something like Fannie Mae is exactly what they SHOULD be bailing out, of course this ignores the fact that this was self inflicted by goverment under Clinton pressure.

What is right. Let the corrupt temple collapse.

Think you have ignored the posts on just what Fannie Mae is compared to say Citi, AIG, Goldman Sachs etc.....there is no "let it fail" option available to something like Fannie Mae without creating shockwaves across the global of epic levels. We are talking trillions of dollars here, thats with a capital T.

[Justice and Mercy]

Think you have ignored the posts on just what Fannie Mae is compared to say Citi, AIG, Goldman Sachs etc.....there is no "let it fail" option available to something like Fannie Mae without creating shockwaves across the global of epic levels. We are talking trillions of dollars here, thats with a capital T.

Think I don't care.

Think it should've been dismantled years ago.

Think it's a cancer on our economy, and whatever damage may be done by cutting it off, it must be done.

Think it's un-Constitutional in the first place, both Fannie and the bailouts.

Think it's immoral in the first place, both Fannie and the bailouts.

[danzig]

Think I don't care.

So you dont care about a possible global economic collapse...something that would impact you and everyone on this forum? Ok then, enjoy your barb wired, minefield laced cabin in the mountains....that is hope you have one if things happened as you wished, unless of course Fannie Mae held the mortgage on it in which case oops!

[JP226]

Fannie and Freddie are the only reason right now the credit market is moving. So, there.