Fannie Mae needs more of your money too
Fresh on the heels of the announcement that Freddie Mac needs $10B more taxpayer dollars (more here), comes the announcement from the other half of the “Disaster Twins” that Fannie Mae lost $13.4B in the first quarter. Therefore it will be necessary to flush another $8.4B in taxpayer funds into this toxic toilet. (more here and here).
The worse news is that there is no conceivable end to these losses. In their mania to avoid letting real estate values reach market-clearing levels, the Bush and Obama administrations have effectively made the entire American home mortgage industry into a de jure government operation. All but a tiny fraction of mortgages in the United States are now taxpayer-guaranteed. More than half of the Federal Reserve Bank’s portfolio now consists of mortgage-backed securities.
We can’t afford this massive FAIL. Congress and the administration have no exit strategy and the losses are mounting. How long before this mess destroys whatever meager economic recovery we’re just beginning to see?