And to Pay Dividends to the Federal Government It Needs to Borrow From the Federal Government
Even though it was a private corporation, Fannie Mae, the entity formally known as the Federal National Mortgage Association, enjoyed the full faith and credit support of the Federal government. This occurred despite the fact that oversight of the company was slight, lending/investment practices were horrific and compensation to its top executives was huge.
When the housing crisis hit the Federal Government has a choice between taking over the company, or allowing it to go bankrupt and destroying, at least temporarily the
mortgage industry. The Bush Administration chose to take over the company, and it is now owned and operated by the Feds. But Fannie Mae continues to lose money and now it needs more. U. S.
Fannie Mae said it would seek $7.8 billion more in
government assistance after posting a wider loss in the third quarter as the housing market's troubles continued. U.S.
The Washington-based mortgage finance company on Tuesday posted a net loss of $5.1 billion in the third quarter, compared with a year-ago loss of $1.3 billion. It was the 16th loss in the past 17 quarters for the company, which nearly failed more three years ago and has been kept on government life support ever since.
It is not just to cover losses that the company needs money. See it issued stock to the government, and now it needs government money to pay the government. Really, you cannot make that sort of stuff up.
The request for aid from the Treasury Department includes $2.5 billion to cover required quarterly dividends paid to the government. It brings the total cost to taxpayers of Fannie Mae's rescue up to more than $94 billion.
Of course, the problems are not the fault of the company.
"Our results in the third quarter were significantly affected by continued weakness in the housing market and the economy overall," Michael J. Williams, the company's chief executive, said in a statement.
And whose fault is all of this? Well Conservatives would say Democrats, but here is what the Wall Street Journal story said
The losses reported Tuesday stem from loans made from 2005 through 2008, while the housing boom turned to bust. By contrast, loans being made since 2009 are expected to be profitable.
And who was in control of the federal government at those times?
And here is an interesting bit of stupidity
Sharp declines in long-term interest rates during the third quarter led Fannie Mae to report an additional $4.5 billion loss on the value of derivatives investments that are used to hedge against swings in interest rates.
See hedges are used by financial managers to reduce or eliminate risk. Fannie Mae had the opposite experience. Nice going guys. And to thank you for doing such a great job there is this.
U.S. lawmakers are seeking to rein in pay for executives at Fannie Mae and Freddie Mac, the mortgage-finance giants that remain on taxpayer life support, nearly two years after the government approved the firms' compensation arrangements.
The firms' continued losses, largely the result of loans that they guaranteed as the housing boom turned to bust, have resurrected calls from Republicans and Democrats to scrap the multimillion-dollar pay deals.
Their top executives received nearly $13 million in cash awards granted at the start of 2011 based on regulators' assessment of corporate and individual performance goals.
We know, no need to thank the taxpayers, you’re just doing your jobs.