I frankly don't trust what the American Enterprise Institute usually has to say, but this one may be right. According to a former U.S. Treasury Peter Wallison, now at AEI, the U.S. taxpayer may lose $400 billion on the Freddie Mac and Fannie Mae bail outs. Here is the Bloomberg video interview
Taxpayers will lose more than $400 billion dollars
We noted Fannie and Freddie received an unlimited bail out, on Christmas Eve. no less (some present for the U.S. taxpayer!).
What a time to bury a press release,Christmas Eve, the headlines awash on health care bill Senate passage. Well, some of use are wired to God and despite cooking pomegranate glazed ducks and wrapping presents, we're not asleep at the wheel!
Treasury is now amending the PSPAs to allow the cap on Treasury's funding commitment under these agreements to increase as necessary to accommodate any cumulative reduction in net worth over the next three years. At the conclusion of the three year period, the remaining commitment will then be fully available to be drawn per the terms of the agreements.
We on the Economic Populist haven't talked much lately on those U.S. taxpayer funded money pits, Fannie Mae and Freddie Mac.
The government took Fannie and Freddie into conservatorship in September 2008.
At that time, each institution was pumped with $100 billion to $200 billion total. Then in February 2009, each received another $200 billion each to bring the bail out tally to $400 billion total.
Realize Freddie and Fannie are not part of TARP, this is a separate bail out.
The MBS (mortgage backed securities) between the two of them is estimated at $5 trillion dollars.
There is no independent auditor overseeing the federal agency responsible for some $6 trillion in home mortgages, because the Department of Justice's Office of Legal Counsel ruled that the agency's inspector general didn't have authority to operate, according to internal memos obtained by the Huffington Post.
The ruling came in response to a request from the Federal Housing Finance Agency itself -- which means that a federal agency essentially succeeded in getting rid of its own inspector general.
The FHFA is home to Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, which are jointly responsible for purchasing or guaranteeing more than 80 percent of new mortgages issued since the middle of 2008, according to FHFA numbers.
This is kind of a follow-up to this story here. And it reinforces the notion that the Administration and the Democratically-controlled congress are dead set on re-inflating the housing bubble.
There are two proposals at play: 1) extending the first-time homebuyer tax credit and 2) Increasing the loan limit amounts for Fannie, Freddie and FHA.
There has been a series of Congressional hearings and there are two which point to some serious trouble at our never ending financial black holes, Freddie Mac, Fannie Mae and the FHA.
Firstly, Fannie & Freddie might require even more money, even though they have received $96 Billion in bail out cash. Total losses to date from these two is $196 billion.
Their books are still bleeding red as foreclosures rise and homeowners — even the highest-quality borrowers — fall behind on their mortgage payments. Several crucial positions remain vacant, and Mr. DeMarco said the agencies are worried about losing workers because of the uncertainties surrounding their fate.
When Congress was debating the bailout of Fannie and Freddie last July, the official estimate from the Congressional Budget Office was that a bailout would most likely cost taxpayers $25 billion, with only a 5% chance of the price tag reaching $100 billion between them.
In addition, both Fannie and Freddie are likely to need billions of dollars more after they report second quarter results in the coming weeks. Experts believe the cost will only continue to rise in the next year.
"We're assuming they each will cross the $100 billion mark fairly soon. They could be hitting the $200 billion barrier by the end of next year," said Bose George, mortgage analyst at Keefe, Bruyette & Woods, an investment bank specializing in financial services firms.
Yesterday, we "invested" another $46 billion in Fannie Mae and Freddie Mac. I should not be so pissed-off at this point but I am.
The Treasury payout yesterday included a $15.2 billion investment in Fannie’s preferred stock and a $30.8 billion purchase of Freddie’s preferred shares, the companies said in separate filings to the Securities and Exchange Commission today. The companies must pay a minimum dividend of 10 percent.
It doesn't seem like we are dealing with this crisis "head-on". Why are we not winding down their operations? I am sorry I forgot we are using them to re-leverage the housing sector.
Do we have effective control over their board and CEO? This quasi-nationalized state does nothing to restore confidence and trust. Are Fannie and Freddie bondholders going to take a "haircut"? Or will that upset China?
A previous foreclosure and eviction suspension to last until Jan. 9 was announced in November by government-sponsored entity Fannie Mae 2008 and later — on Jan. 8 — extended to the end of January. Originally said to be a pause to allow time for the streamlined modification process (SMP) to activate on Dec. 15, the suspension also appears to have been the precursor for a new program announced Tuesday — a national real estate-owned (REO) rental policy through which property managers and brokers may collect rent on Fannie’s behalf — and a move by Fannie to essentially become a giant, government-controlled landlady.
One small step for the people. Fannie Mae is stopping the practice of evicting the tenants who are living in rental properties that have been foreclosed on.
Makes sense right? The bank takes over the property which is earning income from renters, so why were they kicking them out in the first place?
This is a win for all of those renting who were getting thrown out on the street over something they had no control over.
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