Is it any surprise that the next drawdown in a multi-billion dollar ongoing bailout gets posted at 5pm on a Friday afternoon? Not in this economy where Uncle Sam, that’s you and me boys and girls, continues to pay for the woefully mismanaged financial and legislative practices of those in Washington.
The gutless typically prefer to operate under a veil of darkness.
I am referring to the sinkhole that is the organization known as Fannie Mae (FNM), as it comes back to the well for another $15 billion. Bloomberg highlights this ongoing bleeding in writing, Fannie Seeks $15 Billion in U.S. Aid After 10th Straight Loss:
Fannie Mae, the mortgage-finance company under federal conservatorship, said it will seek $15.3 billion in aid from the U.S. Treasury after posting a 10th straight quarterly loss.
A fourth-quarter net loss of $16.3 billion, or $2.87 a share, pushed the company to request its fifth draw on an unlimited lifeline from the government, Washington-based Fannie Mae said in a filing today with the Securities and Exchange Commission.
Fannie Mae, which posted $120.5 billion in losses over the previous nine quarters, has already taken $59.9 billion in federal aid since April. Its shares, which peaked at $87.81 in December 2000, closed at 99 cents today in New York Stock Exchange composite trading.
While America has become numbed by the steady flow of red ink pouring from this organization, the fact is that Fannie’s then CEO, Franklin Raines, raped and pillaged this organization and walked out the door with tens of millions in bonus money. Franklin’s successor, Daniel Mudd, was an administrator not a risk manager.
Franklin’s friends up on the Hill, including Barney Frank, Chris Dodd, John Kerry, Barack Obama, et al not only promoted the misguided policies allowing Fannie to grow out of control, but these pols lined their pockets in the process.
If these aforementioned individuals worked in the private sector, they not only would have been summarily fired but they would have been banished as well.
I forecasted these losses at Fannie Mae last July in writing, Uncle Sam’s Dirty Little Secret Is Revealed:
The fact remains that these two wards of the state are no longer for profit entities but rather vehicles for promoting Obama’s housing plans and redistribution of wealth.
The losses within Fannie and Freddie will accrue as long as housing delinquencies and defaults increase. No credible analyst can truly predict when those statistics may peak. They can guess but given the runup in home prices along with the growth in housing, that is all they can do.
In fact, the argument can be made that the very policies being utilized to forestall delinquencies and defaults will ultimately exacerbate and extend the pressure on the housing market, and in turn, Fannie’s and Freddie’s losses.
Will the American taxpayer ever see a return on the funds being pumped into Fannie and Freddie? Don’t hold your breath.
These losses were avoidable.
Washington’s wayward policies have left America with untold and ongoing losses. Those who brought us into this mess remain, although at least Dodd is on his way out.
This is no way to run a country.