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Back to Quack Off
Quack Off
by
Free Market
Duck
$145 Billion and Counting
By Wall Street Journal
Op Ed
(May 11, 2010)
New York, NY
-- Fannie Mae yesterday announced its 11th
consecutive quarterly loss—$11.5 billion—and asked for another $8.4 billion
in taxpayer assistance. When it comes to losing money, nobody does it better
than this government-created mortgage investor.
Fannie Mae is the Cal Ripken of bad real-estate
deals, reliably pouring taxpayer money into the housing market. Granted,
Fannie faces tough competition from its toxic twin, Freddie Mac, which last
week announced its own request for another $10.6 billion from taxpayers.
Once the checks from Treasury clear, Fan and
Fred will have consumed a combined $145 billion in taxpayer cash, and the
end is nowhere in sight. Both companies warned of further losses triggering
more government assistance, which is now unlimited after a 2009 Treasury
decision.
The losses are unlimited because the companies
are now run by the government not to make money, by deliberately subsidizing
housing. In yesterday's press release, CEO Mike Williams didn't even pretend
that he's running a profit-making business. "In the first quarter we
continued to serve as a leading source of liquidity to the mortgage market,
and we made solid progress in our ongoing efforts to keep people in their
homes," he said. These efforts to support the Obama anti-foreclosure program
resulted in a doubling of loan modifications compared to the previous
quarter.
Ramping up modifications makes perfect sense in
the upside-down world of Fannie Mae. The company also announced that most of
the loans it modified in the first three quarters of 2009 had gone
delinquent again within six months. Talk about an exciting business
opportunity! In case anyone still hasn't gotten the joke, the company also
clarified yesterday that its directors "are not obligated to consider the
interests of the company" unless the government tells them to do so.
The real joke is that the Obama Administration
and Senator Chris Dodd have collaborated on a financial regulatory-reform
bill that includes no reform of Fan or Fred. Senators should rectify this
embarrassment as early as today by voting for John McCain's amendment to end
this most costly of all bailouts.
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