 Between yesterday's Ft. Hood shooting and the unemployment news, this story is bound to get lost in the shuffle. But it shouldn't:Fannie Mae, the mortgage buyer seized by regulators, plans to tap emergency U.S. capital for a fourth time this year, bringing its draws of taxpayer money to $60 billion as the company sees no immediate end to its losses.
Fannie Mae will seek $15 billion in Treasury Department financing after posting an $18.9 billion third-quarter net loss, according to a Securities and Exchange Commission filing late yesterday. The Washington-based company, which posted $101.6 billion in losses over the previous eight quarters, has already tapped $44.9 billion from the $200 billion emergency lifeline.
"They're going to need that $200 billion in capital, if not more, when this thing's all said and done," said Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia. Last year, when Fannie and Freddie recieved a $200 billion bailout it was generally recognized that the two Government Sponsored Entities, which have virtually a monopoly on the U.S. mortgage market, had protected their corrupt fiefdom by lobbying and otherwise manipulating the political system. William Poole -- one of the most respected economists in America, and former president of the St. Louis Federal Reserve Bank -- said that "Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer." The Office of Federal Housing Enterprise Oversight issued a damning report about Fannie and Freddie's troubling accounting practices in 2004, and yet Democrats in Congress lined up to defend the Fannie Mae and it's politically connected CEO, Franlin Raines. Almost no one has been held accountable since then -- but taxpayers are still shelling out billions. Further, today's unemployment data suggests that Fannie's woes are going to continue for some time. Over at The Atlantic's business blog, Daniel Indiviglio wonders:Does anyone still think it's a good idea for the U.S. government to implicitly guarantee approximately half of the U.S.'s $12 trillion mortgage market? I sincerely hope that Washington is serious about scaling down or eliminating Fannie and Freddie, and not just replacing its capacity with broader roles for Ginnie Mae and the Federal Housing Authority. |