“Fannie Mae, (Federal National Mortgage Association) is a government-sponsored enterprise (GSE) chartered by Congress with a mission to provide liquidity, stability and affordability to the U.S. housing and mortgage markets.”
Yet they have managed to do just the opposite of the purpose for which they were created. With record numbers of foreclosures and mortgage problems being reported, I fail to see how I can paint this organization in any kind of favorable light here today.
Fannie Mae would have been in bankruptcy – if they actually applied the true principles within the realm of their creation, as further explained on their homepage (emphasis mine) :
“Fannie Mae was established as a federal agency in 1938, and was chartered by Congress in 1968 as a private shareholder-owned company.” Yet once again, a company deemed “too big to fail” by our government was in effect bailed out by the U S taxpayers. Whatever happened to investors that do not monitor their investments properly, being made to accept the loss here? Why should our government step in and make the taxpayer bear this debt burden?
Introducing Freddie Mac should have been more aptly named Fannie Mae II, as their mission statements are virtually the same, as reported on freddiemac.com (emphasis mine).
“Freddie Mac was chartered by Congress in 1970 with a public mission to stabilize the nation’s residential mortgage markets and expand opportunities for homeownership and affordable rental housing. Our statutory mission is to provide liquidity, stability and affordability to the U.S. housing market.”
Read that mission statement again, then ask yourself, “Have they accomplished their mission, or any part of it today? ” Again, I am trying to shed a positive light on Freddie Mac, but all I see are huge abject failures as to their own mission statement. I think the statement, “To stabilize the nation’s residential mortgage markets,” when looking at our mortgage foreclosure/ housing crisis of today, is ludicrous, to say the least. They claim to be playing an important role in helping people avoid foreclosure, yet at what price to the taxpayers and the economy?
Fannie and Freddie admit to 20 billion in losses.
While it is almost impossible to put a total cost to the taxpayers the full extent of the Fannie Mae and Freddie Mac GSE’s, ( Government Sponsored Enterprises) figures are now emerging that show us the enormity of the waste, abuse and corruption inherent in both of the organizations once again. Another fact that must be addressed is that Congress passed a “Financial Reform Bill” in July of last year that ignored the problems at Fannie and Freddie completely. How can you claim to reform the financial system and ignore the largest mortgage holder in the USA ? That just doesn’t make sense.
Earlier in the spring of 2010, Bloomberg Businessweek printed an article that tried to summarize the problems and expense of taxpayer funding through the government backing of Fannie Mae and Freddie Mac.* The fact that the Fannie and Freddie Foreclosure club is at the center of the housing crisis and financial collapse just cannot be denied. Note that this exposure was before they passed the financial reform bill. They knew the basic facts and chose to ignore them anyway.
When the history books are written about America’s early 21st Century financial system breakdown, what will they make of Fannie Mae and Freddie Mac? These two government-sponsored enterprises (GSEs) that own or guarantee 76 percent of all mortgage originations were at the center of the credit market collapse. Bailing them out has cost the U.S. taxpayer $145 billion and counting.” Estimates of their losses today run much, much higher as new facts emerge.
Keep in mind that this article was written in May of 2010, yet the costs to the taxpayer had already soared to $145 billion dollars. In an earlier article at CDN, “Money for Nothing and Your Houses for Free“, I pointed out how the taxpayer was also paying for the legal costs incurred by the top 3 corruptocrats at Fannie and Freddie, who continued to rake in huge salaries and bonuses after admitting to complicity in cooking the books and inflating the financial outlook at Freddie Mac to increase their bonuses. There appears to be an ever emerging pattern of corrupt practices within the higher ups in both organizations, and it certainly appears to have the approval of our elected officials in Congress, as they refuse to stop this madness mo matter how much proof is put in front of them.
Bloomberg Businessweek further goes on to state how with very little public discussion, or exposure in the media, “ Uncle Sam has basically nationalized their $5.5 trillion in home-loan assets. The Obama Administration has pledged to cover unlimited losses at Fannie and Freddie through 2012, a commitment that goes beyond a prior credit line of $400 billion (which itself had been doubled). In early May, Fannie posted a $13.1 billion loss while Freddie fessed up to losing $6.7 billion. The pair now tote $340 billion in nonperforming assets. ( 2012 also happens to be an election year, and without government protection, the people just might find out how bad this situation really is here, and that could have an enormous effect on said elections).
With all of the books being cooked to the point of complete confusion, I can’t fault the 111th Congress completely here, yet the bleeding of taxpayer dollars was very obvious, even to the most naïve and incompetent of government accountants. On May 11th of that same year Senator McCain called for the stoppage of the Fannie and Freddie debacle. What did the Democratic Majority in the Senate choose to do then? They ignored the calls for true reform at F&F and instead shifted responsibility to the Treasury Department to do some “studies” on how to take F&F off the taxpayers bank account. Meanwhile, record foreclosures, high unemployment, and an economic recession were crushing the country. Is this what the people voted for in the 2010 elections? This writer certainly doesn’t think it is.
There is also a Ginnie Mae, as in Government National Mortgage Association. (GNMA)
This company was originally a part of Fannie Mae and was originally created during the recovery from the Great Depression. This was widely known as the lending arm of HUD, or Housing and Urban Development. In 1968 Fannie Mae and Ginnie Mae split with Fannie Mae going public on the NYSE with Ginnie Mae remaining as a government owned association. So why haven’t we heard much about Ginnie Mae during this housing mortgage crisis in recent years? I plan on researching this entity more thoroughly in a upcoming article in this continuing saga. I can give a hint of what I have found so far on Ginnie Mae. It fits the same pattern as the other family members in the mortgage business attached to our government. One top executive was convicted of mortgage fraud at Lend America.. and continued to to help run the company, with the full endorsement of Ginnie Mae. In December of 2009 the FHA removed Ginnie-approved Lend America from the FHA program completely, mainly due to corruption, fraud and bad lending practices. Yes we have a definite pattern of corruption and incompetence emerging here in all three of these entities.
Fast forward to today. Fannie and Freddie still basically operate on a blank check written on the taxpayers bank account. The housing and mortgage crisis is still crippling our economy, yet I see no proposed legislation to put a stop to this debacle. We the people need to call up and write to our representatives and demand that the taxpayer funding of Fannie and Freddie be stopped immediately. A few Bernie Madoff-style criminal charges are also warranted here, to forcefully send the message that those responsible for this kind of debacle will be held accountable. With the recent announcement by the CBO of the 2011 Federal deficit hitting $1.5 trillion, immediate action is needed. Congress has all the data. No more“studies, no more “reviews”and no more dithering. Stop the bleeding of taxpayer dollars through Fannie and Freddie and do it now, there is no excuse for continuing to allow this massive fraud and abuse of taxpayer dollars.