Posted by Jason | Posted in Economics, Government | Posted on 21-10-2010
According to the Wall Street Journal, the tax payer may be looking at another $363 billion bailout, but this time just for Fannie and Freddie.
Fannie Mae and Freddie Mac’s regulator said Thursday that the companies could end up costing the government $363 billion as they absorb losses from bad mortgages.
Fannie Mae and Freddie Mac’s regulator said Thursday that the companies could end up costing the government $363 billion.
The Federal Housing Finance Agency ran stress tests under varying scenarios. The best case, with improving housing prices, saw the government-sponsored mortgage operators drawing a cumulative $221 billion in taxpayer money. If house prices drop, the bill would hit $363 billion.
“These are not predictions; the results reflect the potential effects of a limited set of hypothetical changes in house prices, a key variable driving credit losses for the enterprises,” said FHFA Acting Director Edward DeMarco.
To date, Fannie and Freddie have drawn $148 billion from the Treasury Department under the Preferred Stock Purchase Agreements program. The government took over the two enterprises in September 2008 as they faced a financial crunch.
Why are tax payers on the hook? If these GSEs wanted to act like businesses with their profits and their million dollar pay packages for the executives, then they should be handled like the rest of the private sector, where you go bankrupt if you run your business into the ground. Of course, that won’t happen. The reason that won’t happen is the other banks, you know the ones that surround Obama, use Fannie and Freddie to sell off their crappy mortgages. They want their profits now, and they want the tax payer to take the long term risk. Add to that, the amount of money being made by those who are in government one day and running these GSEs the next, making millions of dollars a year in the process, and it’s no wonder they won’t let these criminal institutions go under.
Does the media explain it to you that way? Of course not. They make it seem like something has to be done to save these GSEs, and they just pass the government propaganda along to the public. Jefferson was right. If I had to choose a government with no press or press with no government, I’d choose the latter. We currently have the former, so can we give the latter a shot now?