Today brings more great news from the bailout. Fannie Mae, which has already eaten over $100 billion of taxpayer money after being absorbed by the federal government in 2008, took a loss in the second quarter of $5.2 billion — and they want taxpayers to cover it:
Mortgage finance giant Fannie Mae said it would ask for an additional $5.1 billion from taxpayers as a weaker housing market causes continued losses on loans made prior to 2009.
The largest U.S. residential mortgage funds provider on Friday also reported a second-quarter net loss attributable to common shareholders of $5.2 billion, or 90 cents per share.
Don’t expect this to be the last request, either:
It forecast continued weakness ahead, with high unemployment and foreclosures expected to put more downward pressure on home prices. …
Fannie Mae said its second-quarter loss “reflects the continued weakness in the housing and mortgage markets, which remain under pressure from high levels of unemployment, underemployment and the prolonged decline in home prices since their peak in the third quarter of 2006.”
It said expenses related to mortgage modifications to keep struggling borrowers in their homes also contributed to its loss.
Expenses related to mortgage modifications? Say, didn’t the Obama administration get a separate $75 billion to cover those expenses in HAMP? And wasn’t it a year ago that we found out that HAMP had become a waste of time and (especially) money?
Congress and Obama have had more than two years to work on disconnecting taxpayers from Fannie Mae and Freddie Mac. Even if one accepts the notion that seizing the two GSEs made sense as an emergency measure, we cannot keep covering their losses. At some point in time, the investors have to take responsibility for their bad decisions. Instead of passing ever-increasing regulation on industry that chokes off economic growth, perhaps the Obama administration and Congress should spend some time protecting taxpayers from the ongoing bleed-out at Fannie and Freddie.