Friday, February 25, 2011

Fannie Mae and Freddie Mac Lost $41.5 Billion of Taxpayer Monies in 2010

...And of course Fannie and Freddie both want more money.  The giant mortgage losers were placed in "Government Conservatorship" in September 2008.  The two, plus the FHA , currently own or back more than 92% of all new mortgages.   The Obama Administration is making noise about doing away with them...years from now.  This is a socialized housing market at its finest...or at its worst, depending on where you're sitting while contemplating the issue.


Montpellier said...

While the GSEs are a real debacle right now, their condition and role are a direct result - not cause - of the failure of the 'private market'.

Please quit ignoring TALF, which is the very quiet backdoor $1 Trillion bailout of the Private Label Mortgage Issuers and Banks by the Federal Reserve. The TALF (Toxic Asset Lending Fund) is all that is propping up Citi, JPM, and GS all of which would have been killed in mark-to-market of these assets.

Instead, all of these big, private, free-market institutions have been able to swap the worthless junk on their balance sheets for US Treasuries.

Even with this massive government bailout - FOUR TIMES the size of the GSE bailout - these institutions are still either unable or unwilling to resume lending - to resume issuing mortgages. Because of this massive PRIVATE FREE MARKET FAILURE - as in the Great Depression that spawned the GSEs - it is necessary that we have the GSEs to actually continue making loans, or the entire housing market infrastructure would collapse affecting many borrowers, not just irresponsible and jobless NINjA borrowers (flippers). Clearly we cannot rely on the Private Free Market for this crucial economic infrastructure.

Although the GSEs did eventually follow the Private Label Free Market Mortgage Bond issuers into unsound and overly risky bad underwriting guidelines, they did not lead the way, and they only became actuarially unsound when the Private Label issuers blew up the market.

I know that some on this blog have an ideological agenda in favor of "free markets" (as if such a thing really existed anywhere but in the imaginations of Proto-Austrian economists or the masturbation fantasies of Darden "researchers"), but you really need to quit with the one-sided half-truths.

Where's some reporting on the TALF?

Cville Bubble Blog said...

Montpellier, fwiw, nobody on this end favors (believes) in such a thing as a "free market"--not in this day and age. There used to be a couple virulent commenters that did, however.

The stock market is controlled by a small number of entities at this point, the banksters are firmly entrenched, in control, and sucking money from "the people," and both political parties are equally swayed and corrupted by $.