Connect with us

Hi, what are you looking for?

The American GeniusThe American Genius

Economic News

Fannie Mae loses money, wants more assistance- any end in sight?

Major losses = more credit?

Despite a first quarter loss of $13.1 billion, Fannie Mae requested an additional $8.4 billion, on the heels of Freddie Mac’s announcement of losing $8 billion and requesting an additional $10.6 billion in federal assistance. Fannie’s losses are $3.5 billion lower than their 2009 fourth quarter losses.

The U.S. Treasury Department took control of Fannie Mae and Freddie Mac in 2008 as conservators “temporarily” but have yet to hint at any plan for a solution. Fannie and Freddie have already been issued over $145 billion in assistance.

Typically, when someone is in debt and continues to lose money, lenders don’t answer by offering more credit, but on Christmas Eve, the Obama administration pledged to backstop all losses for Fannie mae and Freddie Mac through 2012 indicating the never ending line of credit from Uncle Sam.

Will the losses stop soon?

“Given our expectations regarding future losses and draws from Treasury, we do not expect to earn profits in excess of our annual dividend obligation to Treasury for the indefinite future,” Fannie Mae said to Reuters.

Fannie Mae warned of “significant uncertainty as to our long-term financial sustainability” as it expects the continued weak housing market to keep default rates and credit-related costs high.

Advertisement. Scroll to continue reading.

Housing analyst Rajiv Setia of Barclays Capital said Fannie Mae is likely to draw another $40 billion to $50 billion from the U.S. government, bringing the total assistance to Fannie and Freddie to over $200 billion.

Politicians answer

Senior senators Richard Shelby of Alabama, Judd Gregg of New Hampshire and John McCain of Arizona want to require the government to end its conservatorship and control over Fannie and Freddie within 24 months. Their amendment will go under consideration tomorrow although it is not expected to win enough votes to pass.

You answer…

The Senate can’t agree, Geithner doesn’t have a plan, and ideas that no one can agree on (like total abolishment of Fannie and Freddie) are all we’re hearing. So, we ask what you think the answer is? With Fannie and Freddie hemmorhaging money and no end to Uncle Sam’s line of credit in sight, what is the answer?

Advertisement. Scroll to continue reading.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.


Leave a Reply

Your email address will not be published. Required fields are marked *


American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.



Housing News

(Housing News) Fannie Mae is offering incentives on foreclosures, and while many homeowners are unaware, many agents are as well - time to take...

Housing News

(Housing News) Once thought an impossibility, the controversial Mel Watt has been confirmed as the next head of the FHFA, which some say is...

Housing News

Bank of America will shell out $404 million to settle their final claim between the big bank and Freddie Mac and Fannie Mae, covering...

Housing News

CFPB was created by the Obama administration in 2011 to protect consumers, and immediately sought out ways to "bubble-proof" America, starting with mortgage disclosure...

The American Genius is a strong news voice in the entrepreneur and tech world, offering meaningful, concise insight into emerging technologies, the digital economy, best practices, and a shifting business culture. We refuse to publish fluff, and our readers rely on us for inspiring action. Copyright © 2005-2022, The American Genius, LLC.