Monday, May 9, 2011

And Therein Lies The Problem

Another bank closing.
The devastation that was our mortgage and securities market is showing little signs of recovery, despite massive Federal borrowing and money printing. Fannie Mae and Freddie Mac continue to be the anchors that drag our financial ship to the bottom. By October of 2010 the two were sucking down 135 billion in Federal funds. That amount ballooned to 154 billion by the end of 2010, and 2011 looks to carry on in the same tradition, with losses of over 200 billion:
Fannie Mae asked the government Friday for an additional $8.5 billion in aid after declining home prices caused more defaults on loans guaranteed by the mortgage giant.

The company said it lost $8.7 billion in the first three months of the year. Those losses led Fannie to request more than three times the federal aid it sought in the previous quarter. The total cost of rescuing the government-controlled mortgage buyer is nearing $100 billion - the most expensive bailout of a single company.
 ... even though I haven't earned it.
!00 billion. Not so bad, eh? Yeah, well that's only one of them:
Combined with the bailout of sibling company Freddie Mac, the government expects their rescue to cost taxpayers about $259 billion. That money will cover the mortgage giants' losses on soured loans made in the midst of the housing bubble.
The companies nearly toppled because of losses on risky mortgages that they purchased between 2005 and 2008. They tightened their lending standards after those loans started to go bad.

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