Since this show began, the Willis Report has heard from expert after expert on what to do about Fannie Mae and Freddie Mac; everyone seeming to have a different answer.

Just since we've been on the air, the enterprises have asked for billions more in taxpayer money.

Today the Federal Housing Finance Agency released its first "conservator's report" on Fannie and Freddie.

It would probably better be named the Freddie and Fannie autopsy.

Let's break it down:

At the end of 2007: Fannie and Freddie had a combined capital of $71 billion. Not bad.

But since then, the two have lost $226 billion in capital. Fannie Mae lost $126 billion and her counterpart getting $90 billion in the hole. That prompted the Treasury Department to funnel $148 billion,  so far, into the behemoths.

So where did Fannie and Freddie lose all their capital? Single-family home guaranteed loans!

More than 70% of their capital erosion was because of lost money on their core business - the main reason Fannie and Freddie were created!

So are Fannie and Freddie to blame for the housing crisis?

You bet they are. They were the tool for social engineering instituted by Congress -- what was technically known as the Federal Housing Enterprises Financial Safety and Soundness Act.

Ironically, it was this act that turned the market on its head. Under its terms, regulators abandoned common sense underwriting -- you remember down payments, good credit, solid income -- and substituted the liberal lending that ultimately brought down the housing market

And now we are harvesting the results -- for Fannie Mae: single family serious delinquency rates went from 1% back at the start of the recession - to 5% in the last quarter.

Freddie Mac didn't fair much better. Going from 0..7%  to a 4% serious delinquency rate.

It's time we cut our losses and come up with a new plan. Fannie and Freddie aren't backing our loans anymore - they're just sucking us dry.

 

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