THE FANNIE & FREDDIE FARCE IS OVER & THE TAXPAYER IS ABOUT TO GET A$$ RAPED AGAIN

Interesting how the MSM virtually ignored this little tidbit of information. A report from the inspector general for the Federal Housing Finance Agency, which regulates Fannie and Freddie, warns that these two bloated insolvent pigs are going to face declining profits and miniscule capital cushions which will result in the taxpayers getting fucked over once again.

The inspector general’s report noted that for the past few years, Fannie and Freddie’s net income has been driven by major legal settlements as well as the revaluation of tax assets and other one-time items that aren’t sustainable. That, along with the companies’ declining capital cushion, increases the likelihood they could need more government money in the future.

More government money means more of your money.

Here’s the truth about Fannie and Freddie. They hold trillions of mortgages on their books. Their balance sheets were filled with toxic mortgages in 2008 when the financial collapse occurred. You, the taxpayer, were forced to give these criminal government entities $187 billion to cover their losses.

But that was the tip of the iceberg. In March of 2009 the FASB suspended real accounting and allowed fake accounting for financial firms. So, for the last five years Fannie and Freddie could pretend they weren’t insolvent and have reported fake profits of $228 billion. They were nothing but accounting entries. They didn’t generate actual cash. They reduced their loan loss reserves and recorded tax benefit entries and a myriad of other hocus pocus bullshit.

It gets better. They then pretended to “pay back” the US Treasury with these fake profits. This is a major reason for Obama taking credit for declining deficits. These fake profits reduce the real deficit – on paper. Who says accountants aren’t bad asses?

The way you know these profits are fake is the stock price of Fannie and Freddie. Both stocks trade at $2.50. They have supposedly been generating $25 billion per year in profits – each. Back in 2007 they were generating profits of $4 to $6 billion per year and their stock prices were $70 per share. The market knows they are insolvent and knows the profits are a sham.

But now, even the sham profits have dried up. There are no more journal entries to make. No more fake profits to report. The housing market is headed south, the 3% down mortgages to deadbeats is going to blow up in their faces, and the American taxpayer is going to be ass raped again when the billions in losses start rolling in. This report is telling you what is about to happen. Book it Dano.

Guest post by Investment Research Dynamics

Fannie And Freddie Are Headed For Another Bailout

Taxpayers pumped over $200 billion in to Fannie Mae and Freddie Mac after the financial collapse of 2008.   While the Obama Government used taxpayer subsidized loans to move  a large quantities of foreclosed housing inventory from the FNM/FRE and in to big investment funds, FNM/FRE were busy ballooning their mortgage holdings – again.

Now the Inspector General’s Federal Housing Finance Agency has issued a warning that both FNM/FRE are headed for another bailout, which is no surprise to me:

“Future profitability is far from assured,” Federal Housing Finance Agency Office of Inspector General said in a report, pointing out that the firms could again chalk up losses on their derivatives portfolios, similar to those they reported in the fourth quarter. “This increases the likelihood of additional Treasury investment,” the report stated.  Reuters (LINK)

Similar to when Fannie was plugged full of derivatives under former CEO Franklin Raines – who by the way had no clue how catastrophic the situation was and should be in jail but instead received a $100 million “you’re fired” severance agreement – the Government has once again looked the other way while Wall Street unloaded another avalanche of derivatives onto FNM/FRE.   Once again the Taxpayers will pay for this.

This is not a ‘warning” – this is a “get ready here it comes” statement.   The fact is that most of FNM/FRE’s “profitablity” has been driven by the same fraudulent “mark to model” accounting that has generated most the big bank profits since 2009.

fragile-by-design

And the Government used this fraudulent accounting to suck money out of FNM/FRE.   The “improved” balance sheet has enabled both FNM/FRE to issue debt to investors.  The money raised has been used reload their mortgage holdings and for dividend “payback” payments to the Treasury.

FNM’s CEO warned of the possibility of another bailout in February, after announcing FNM’s smallest dividend payment to the Treasury in more than four years.  This is not a warning – it’s an inevitability.  The housing market is set to re-collapse, which will blow-up both Fannie and Freddie – once again.

 

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Westcoaster
Westcoaster

Fannie and Freddie are a big part of why a house costs 2 to 3 times what it should cost, leading the parade of why our money is worth-less.

Tommy
Tommy

Wait, so you’re telling me pseudo corporate government run entities masquerading as legitimate private interests doesn’t work? You quack. Next, you’ll be telling me the post office operates on public money as well when we all know it to be a well oiled machine of perfection just like ‘savior-care’. Your probably raciss’ too.

Overthecliff
Overthecliff

What will this do to the federal budget deficit?

Iska Waran
Iska Waran

Sounds like the biggest hosees are the buyers of Fannie / Freddie debt. Incl the Fed.

Rise Up
Rise Up

I worked at Freddie during their heyday for two years (2007-2008) as a director in their Information
Technology department. At that time, Freddie was frantically trying to get SEC registration and I spent an inordinate amount of time with auditors from KMPG, PWC, Deliotte, and Ernst & Young (boy did I learn a lot about COBIT!).

Anyway, it was a lavish place as far as business offices go. Best cafeteria food, lots of catered meetings and parties–but I hated the place because the upper IT management were from the financial world and didn’t know jack shit about how to manage there systems efficiently. Lots of wasteful spending on hardware that was unneeded.

Here’s a little primer on how GSE’s work and the mess they got themselves into.

DC Sunsets

Yes, and the head honchos have the GSE’s have banked KING’S RANSOMS in compensation.

The mafia never held a candle to the political system.

Politics is simply the MOST organized crime, with a PR department that writes the history books so all citizens learn a comprehensive mythology that rationalizes the political system’s existence.

It’s a religion, no different from any other; it has priests, acolytes, etc. and except for anarchists, everyone is a True Believer.

robert h siddell jr
robert h siddell jr

Banks were ordered to make minority (sub-prime crap) mortgage loans in “Red Lined” areas (thanks to activist suits by commies like Obama) and Fannie & Freddie were given Black CEO’s who bought them. Obama became POTUS in 2009 of a bad economy so he took over student loans from Sallie Mae, opened the spigots for sub-prime home and auto loans, turned Food Stamps, Unemployment and Social Security (esp SSD) into welfare “entitlements”, etc. Soon, he will make Greece look like a well managed country.

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