Fannie Mae asked the U.S. government for an additional $8.4 billion in aid after posting an $11.5 billion net loss for the first quarter, the latest sign that the bailout of the mortgage investor and its main rival, Freddie Mac, is likely to be the most expensive legacy of the U.S. housing-market bust.
Fannie’s losses reflected continuing weakness in the housing market and would have been worse without accounting changes that reduced its deficit. The quarterly loss was an improvement from the $23.5 billion loss for the year-ago quarter and marked the 11th consecutive quarterly loss for the Washington-based firm.
The company has now racked up losses of nearly $145 billion, or nearly double its profits for the previous 35 years. While many of the nation’s biggest banks have repaid their government loans and some are back to racking up big profits, Fannie and Freddie are still suffering from the housing-market crisis.
Update: FNM’s balance sheet could very well be hiding even more losses. Ugh–read it all also.
Fannie Mae and Freddie Mac, along with the Community Reinvestment Act, have been the elephants in the room since Day 1 of this government-manufactured economic crisis, and yet no one will acknowledge that is what took us down.
Here’s an announcement from just one bank, Bank of America, before the collapse, about committing itself to make $1.5 [b]trillion[/b] in government-mandated high risk loans under CRA:
[blockquote]
“$1.5 Trillion Community Development Goal
Our continuing commitment to community development will not waver. As you know, in 2004, we raised the bar when we announced our ten-year, $750 billion community development goal. Today, we are raising that bar.
I am proud to announce Bank of America’s new, and unprecedented, 10-year goal of $1.5 trillion for community development lending and investments. This is the largest community development goal ever by any company in America. In coming years, this goal is certain to enhance quality of life for millions of Americans in need, by:
• helping finance construction of affordable housing throughout the nation,
• providing loans and other needed capital to small businesses,
• supplying consumer loans, including housing finance, for low- and moderate-income and minority borrowers, and
• financing economic development for communities in need.
In addition, our Charitable Foundation is raising its philanthropic giving goal from $1.5 billion to $2 billion over 10 years. This is the most ambitious long-term corporate philanthropic goal ever announced by any company. We are setting this goal despite uncertain economic times.
We are optimistic about the future prospects of the housing market and the enhanced mortgage services Bank of America will offer after its acquisition of Countrywide. In announcing our new, $1.5 trillion community development goal, industry-leading mortgage loan practices and new foreclosure mitigation strategies, we ensure that our customers will continue to benefit from Bank of America’s responsible and principled approach to doing business. We encourage others in the industry to follow our lead.”[/blockquote]
Read a lot more that will make your stomach church right here, from BOA’s official press release:
http://newsroom.bankofamerica.com/index.php?s=63&item=202
Americans should be very, very angry at what is going on, and demanding accountability from the Congressional politicians for driving this country into bankruptcy, and yet we are all kept blissfully ignorant by the mainstream media.
Maybe things will change in November.
It will be covered up because the Democratic party and Barney Frank created this mess. The Republicans aren’t blameless, but this belongs to the Democrats.
I can’t read the article on WSJ past the first few lines, but having potential losses hidden or lurking in the financial statements is the key to this issue. Everybody in Congress keeps bleating about transparency on Wall Street, but they turn a blind eye to the same shoddy accounting by government and government sponsored enterprises like Fannie. Seems to me that if they were so sure of their cause to take money from some and hand it over to others, at least they could clearly indicate exactly how much, from whom, and to whom.
#2 Whoa partner! From January 2001 to January 2007 when all this mess accumulated guess which political party held both the house, the senate, and the presidency? I wish it were as easy as changing horses again. The reckless spending continues. Only the beneficiaries change.
NW Bob
The act was enacted in 1977 under Jimmy Carter. It has been tinkered with by both sides over the years, but the Democrats own it. But you are right that changing horses will not fix things. This type of thing transcends parties as both want to feed at the trough. It is a systemic thing that Congress wants to meddle in things, take the credit when things go well and blame the other side if they go wrong.
Here’s how the Bush administrataion tried to control the problem after they came into office, but were uniformly shut down by the Democrats who blocked all attempts at regulatory reform:
http://www.youtube.com/watch?v=cMnSp4qEXNM
http://www.youtube.com/watch?v=_MGT_cSi7Rs