Post by kramer on Mar 14, 2010 22:26:55 GMT -6
I hope this hasn't been posted already...
From the Huffington Post:
Fannie Mae, the largest mortgage company in the entire world, was holding eight times the amount of mortgages off-book than it had on-book.
Thus, despite the fact that it is losing tens of billions of dollars every quarter, and has so far, it was actually hiding the vast majority of its worst performing mortgages off-book.
Just how much is the taxpayer is on the hook for? Well, the former caps were limited to $200 Billion a piece, which the Treasury decided just wasn't enough. So if the losses are north of $400 Billion then we are entering the range of TARP bailout, but with almost none of the press coverage. Or to put it another way: "The taxpayer bailout of Fannie Mae and Freddie Mac will almost certainly be the most expensive of the financial crisis..." There has been at least one attempt at estimating the losses.
"The Congressional Budget Office estimates that Fannie and Freddie added $291 billion to the federal deficit in 2009 and will cost an additional $389 billion to run over the next ten years. However, Fannie and Freddie are currently considered "off budget" meaning the actual cost to run these agencies is not considered by the Office of Management and Budget."
This article contains two nuggets of information. For of all, we are looking at around $600 Billion in taxpayer bailout, assuming the market doesn't take another sharp downturn. That's nothing to sneeze at, and it certainly deserves a lot more press coverage than it has gotten. The second nugget is that all these losses are consider off-budget. So what we are talking about is moving hundreds of billions of dollars of bad assets from off-budget Fannie Mae to off-budget Treasury Department.
Meet the New Boss
After inheriting this disastrous legacy from the Bush Administration, you could only assume that the Obama Administration would do things drastically different, right?
"Fannie Mae will drop some credit-score requirements, reduce income- documentation standards and waive the need for appraisals in some cases, according to a notice yesterday to lenders posted on the Washington-based company's Web site. The changes apply to loans that the company owns or guarantees."
Let me translate for you. "Drop credit-score requirements" equals subprime. "Reduce income-documentation standards" equals liar loans. And it just keeps getting better. The Obama Administration plans to subsidize at-risk borrowers.
Has anyone bothered to ask "How long?" Meanwhile the Fed is buying up all those subprime, liar-loans that Fannie and Freddie are pumping out.
On top of it, the next part of Obama's plan had a ring of familiarity to it:: "The loan-to-value (LTV) limit on mortgages Fannie Mae and Freddie Mac will be able to refinance as part of Obama's Homeowner Affordability and Stability Plan may go higher than the original 105 percent, according to National Mortgage News." Bush's disastrous legacy was to at first ignore the bubble, then to try to keep it inflated until he was out of office by using Fannie and Freddie. Obama's plan is to use taxpayer money to subsidize sub-prime, liar-loans at more than 105% of the home's value with Fannie and Freddie as a conduit. Thus attempting to recreate all the properties of the bubble that got us into trouble in the first place.
[/quote][/size]
Unbelievable. The clusterfuck is even worse than imagined AND it's been kept from us.
And this makes me wonder if we were lied to when we were told that the CRA mortgages had very low default rates.
Kramer
From the Huffington Post:
Fannie Mae, the largest mortgage company in the entire world, was holding eight times the amount of mortgages off-book than it had on-book.
Thus, despite the fact that it is losing tens of billions of dollars every quarter, and has so far, it was actually hiding the vast majority of its worst performing mortgages off-book.
Just how much is the taxpayer is on the hook for? Well, the former caps were limited to $200 Billion a piece, which the Treasury decided just wasn't enough. So if the losses are north of $400 Billion then we are entering the range of TARP bailout, but with almost none of the press coverage. Or to put it another way: "The taxpayer bailout of Fannie Mae and Freddie Mac will almost certainly be the most expensive of the financial crisis..." There has been at least one attempt at estimating the losses.
"The Congressional Budget Office estimates that Fannie and Freddie added $291 billion to the federal deficit in 2009 and will cost an additional $389 billion to run over the next ten years. However, Fannie and Freddie are currently considered "off budget" meaning the actual cost to run these agencies is not considered by the Office of Management and Budget."
This article contains two nuggets of information. For of all, we are looking at around $600 Billion in taxpayer bailout, assuming the market doesn't take another sharp downturn. That's nothing to sneeze at, and it certainly deserves a lot more press coverage than it has gotten. The second nugget is that all these losses are consider off-budget. So what we are talking about is moving hundreds of billions of dollars of bad assets from off-budget Fannie Mae to off-budget Treasury Department.
Meet the New Boss
After inheriting this disastrous legacy from the Bush Administration, you could only assume that the Obama Administration would do things drastically different, right?
"Fannie Mae will drop some credit-score requirements, reduce income- documentation standards and waive the need for appraisals in some cases, according to a notice yesterday to lenders posted on the Washington-based company's Web site. The changes apply to loans that the company owns or guarantees."
Let me translate for you. "Drop credit-score requirements" equals subprime. "Reduce income-documentation standards" equals liar loans. And it just keeps getting better. The Obama Administration plans to subsidize at-risk borrowers.
Has anyone bothered to ask "How long?" Meanwhile the Fed is buying up all those subprime, liar-loans that Fannie and Freddie are pumping out.
On top of it, the next part of Obama's plan had a ring of familiarity to it:: "The loan-to-value (LTV) limit on mortgages Fannie Mae and Freddie Mac will be able to refinance as part of Obama's Homeowner Affordability and Stability Plan may go higher than the original 105 percent, according to National Mortgage News." Bush's disastrous legacy was to at first ignore the bubble, then to try to keep it inflated until he was out of office by using Fannie and Freddie. Obama's plan is to use taxpayer money to subsidize sub-prime, liar-loans at more than 105% of the home's value with Fannie and Freddie as a conduit. Thus attempting to recreate all the properties of the bubble that got us into trouble in the first place.
[/quote][/size]
Unbelievable. The clusterfuck is even worse than imagined AND it's been kept from us.
And this makes me wonder if we were lied to when we were told that the CRA mortgages had very low default rates.
Kramer