More Money For Fannie Mae

By Douglas V. Gibbs

Fannie Mae is asking for an additional $15.3 billion, which would bring the total amount of monies given to the Government Sponsored Enterprise (GSE) by the U.S. Government to $76.2 billion. The mortgage-finance company is asking for the additional funds after suffering a 10th consecutive quarterly loss. The fourth quarter loss for Fannie Mae is $16.3 billion, or $2.87 a share.

Fannie Mae owns or guarantees about 28 percent of the $11.8 trillion U.S. home-loan market, and as was Freddie Mac (Fannie's GSE brother), Fannie Mae was seized by federal government regulators in September 2008.

The financial difficulties the GSEs are experiencing are partially a result of the housing collapse of the last few years. The massive number of foreclosures, however, were not only a part of what destabilized the GSEs, but were caused by the practices of the mortgage financiers as well, which were guided by the liberals in the U.S. Government.

GSEs were created to be a middle-man between the private mortgage industry, and the U.S. Government. In other words, the creation of mortgage finance companies like Freddie Mac and Fannie Mae was designed to enable the federal government an opportunity to be in on the action, while gaining control over the mortgage industry. Through regulations, and the GSEs, the federal government was able to push the philosophy that buying a house is a right that everyone should have, despite their ability to pay, which in turn forced the banks to accept dangerous loans. The practice of accepting loans from people with no ability to repay was not motivated by profit, but by government agenda through actions like the Community Reinvestment Act (CRA) of 1977.

The CRA was intended to bring the opportunity of home ownership to low and moderate income families. The legislation "encouraged" banks, and other lending institutions, to make these bad loans. When the whole system collapsed a few years ago, the leftists in government conveniently disassociated themselves from the agenda, and painted the "fat cat" bankers as the sole cause (despite the fact that in 2004 the Republicans were demanding increased regulation on Fannie Mae and Freddie Mac, and the Democrats refused seeing no problems with the GSEs).

Unfortunately, to simply allow the GSEs to fail, as we should have done with private companies like AIG, would have been catastrophic. Not only does the GSEs own a large portion of the nation's mortgages, but because of the high risk nature of those loans, no other institutions are willing to buy the debt.

The continued onslaught of record breaking mortgage delinquencies, a trend that continues despite the government's claim that we are in a recovery, has contributed to the continued losses during each quarter of each year for the GSEs.

For 2009, Fannie Mae’s loss widened to $74.4 billion from $59.8 billion in 2008.

Currently, Fannie Mae's continuing cash infusions from the taxpayer are critical to keep the GSE from becoming insolvent, according to officials. The losses will continue to mount, as well, with rising unemployment, and an economy that continues to struggle.

The Obama administration is planning to encourage Congress to propose legislation next year that would increase the involvement of the federal government in the housing market, and allow the government to more easily regulate market activity.

Continuing to feed money into Fannie and Freddie, unfortunately, is a continual problem. It is like attempting to keep a sick caribou alive, which slows down the herd, and makes the animals more susceptible to attacks from wolves.

The question I have is, "When will enough be enough?"

I have a feeling the answer is, "Never."

-- Political Pistachio Conservative News and Commentary

Fannie Taps Treasury for $15.3 Billion More After a 10th Loss - Bloomberg

Shocking Video Unearthed Democrats in their own words Covering up the Fannie Mae, Freddie Mac Scam that caused our Economic Crisis - You Tube