The government rescued McLean, Va.-based Freddie Mac and sibling company Fannie Mae from the brink of failure nearly two years ago. The new request means they have needed $148.2 billion to stay afloat, about $63.1 billion of which is being used by Freddie Mac.
Both Fannie Mae and Freddie Mac have both lost tens of billions of dollars during the past two years and both are asking the government to prop them up. Last week,Fannie Mae requested $1.5 billion after posting a loss of $3.13 billion, or 55 cents per share, in the second quarter.
Despite the recent history of Fannie Mae and Freddie Mac, and the fact that they are both still bleeding money they were included in the recent financial reform bill signed by the president.The complete absence of any regulation of Fannie Mae and Freddie Mac in that bill is totally astounding.. Because these two companies are sacred cows of Chris Dodd and Barney Frank, congress refuses to recognize the key role they played in creating the financial mess we are in.
Fannie Mae sounded optimistic about its future. Freddie Mac offered a more tempered view.
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“We recognize that high unemployment and other factors still pose very real challenges for the housing market,” CEO Charles Haldeman said in a statement. “With that in mind, we continue to focus on the quality of the new business we are adding to our book to be responsible stewards of taxpayer funds.”
Fannie and Freddie own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans worth more than $5 trillion. They buy home loans from lenders, package them into bonds with a guarantee against default and sell them to investors.
Those who refuse to learn from history are doomed to repeat it, and if the Democratic party has its way we will continue to fund Fannie and Freddie’s losses and repeat the mistakes of the housing bubble again and again.