Fannie Mae seeks $8.4B in aid after 1Q loss
The rescue of Fannie and Freddie is turning out to be one of the most expensive aftereffects of the financial meltdown. Late last year, the Obama administration pledged to cover unlimited losses through 2012 for the pair, lifting an earlier cap of $400 billion. And with the housing market still on shaky ground, Obama administration officials say it is still too early to draft any proposals to reform the two companies or the broader housing finance system.
http://www.opensecrets.org/news/2008/09/update-fannie-mae-and-freddie.html
Update: Fannie Mae and Freddie Mac Invest in Lawmakers
I guess the $126,349 paid by Freddie and Fannie (and their subordiates and associates) is paying off quite nicely for them.
Who do I have to bribe to become too big to fail?
Created by Congress, Fannie and Freddie buy mortgages from lenders and package them into bonds that are resold to global investors. Together the pair own or guarantee almost 31 million home loans worth about $5.5 trillion. That's about half of all mortgages.
In plain English, this means that banks can make home loans that they know they buyer can't repay. The banks can then sell the bad loans off to Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac then package the loans for resale to unsuspecting buyers. Thus, rather than the banks being held responsible for making bad loans, the whole investing community gets stuck with buying bad loans.
It is good to know that nobody who is involved with the process of creating and processing bad loan investment vehicles will be held accountable for their actions.
Fannie also said it remains dependent on the government to stay in business. "There is significant uncertainty as to our long-term financial sustainability," the company said in a regulatory filing.
How can the economy ever hope to recover if the federal government continues taxing the few remaining profitable businesses and the few remaining employed individuals to support the too big to fail businesses that have no hope of ever becoming successful?
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