• Oops!

      As Congressmen assign blame for deficits to everyone but themselves, Fannie Mae and Freddie Mac continue to bleed away your money. Today’s news is that:

      Fannie Mae will require an additional $8.4 billion in government aid after reporting an $11.5 billion net loss for the first quarter.

      Fannie has lost money every quarter for three years now.

      [T]otaling nearly $148 billion, or nearly double its profits for the previous 35 years. The government's tab for Fannie Mae will climb to $84 billion, and its tab for both Fannie and Freddie will reach $145 billion….

      With so much at stake, is Congress holding hearing to berate Fannie’s managers and demand limits to taxpayers’ risk?  No.  Robert Wilmers, CEO of a more responsible bank, M&T Bank Corporation, argues that it’s time to confront "their outrageous behavior and reckless business practices."

      Wilmers points out that Fannie and Freddie’s losses—now at least $145 billion, exceed much more publicized bailouts:

      [F]ar more than AIG, which absorbed $70 billion of government largess, and General Motors and Chrysler, which shared $77 billion. Banks received $205 billion, of which $136 billion has been repaid. Fannie and Freddie continue to operate deeply in the red, with no end in sight.

      And when you include loan guarantees, as we should, the public’s risk is terrifying:

      At the end of 2009, their total debt outstanding—either held directly on their balance sheets or as guarantees on mortgage securities they'd sold to investors—was $8.1 trillion. That compares to $7.8 trillion in total marketable debt outstanding for the entire U.S. government.

      What has America gained from these boondoggles?  Not much.  Well, some well-connected Fannie and Freddie officials made millions, and lobbyists were paid more than a hundred million dollars, but it is by no means clear that these enormous subsidies improve America’s housing picture.  Since Fannie and Freddie became partners with government:

      [T]he percentage of American households owning homes has increased by merely four percentage points to 67%. In contrast, between 1991 and 2008, home ownership in Italy and the Netherlands increased by 12 percentage points. It increased by nine points in Portugal and Greece. At least 14 other developed countries have home ownership rates higher than in the U.S. They include Hungary, Iceland, Ireland, Poland and Spain. Canada doesn't have the equivalent of Fannie and Freddie. Nor does it permit the deduction of mortgage interest from an individual's taxes. Nevertheless, its home ownership rate is 68%. Canadian banks have weathered the financial crisis particularly well and required no government bailouts.

      No government bailouts.  Imagine that.