All real estate investors can expect bad news regarding this 4th quarter of 2009 after Freddie and Fannie requested a $400 billion ceiling in their credit pool.
With that move, largely ignored in the holiday rush, the White House deftly avoids a nasty, negative headline criticizing the two biggest basket cases in the markets, publicly traded companies who got the biggest total bailouts of all because they are hostage to the Congress's every housing desire.
With Fannie and Freddie quietly failing and requiring more money, the failure of government to manage the housing market has never been so apparent. As home loan defaults continue to skyrocket, Fannie and Freddie each noted in public disclosures that the governments actions take to bailout of the real estate market will cost taxpayers more in the end.
Thus, increasing their lines of available credit is the best, and most secretive way, the administration and legislators can bail them out without attracting a lot more public scrutiny.
Consequently, even more tax payer dollars will go to the undeserved executive bonuses that the leaders of Fannie and Freddie will receive, since they got their bailout money before the initial pay guidelines were in place, and the increase in available credit does technically constitute a bailout.
Unlike Citigroup, Bank of America, AIG, Chrysler, and GM, Congress deemed that Fannie Mae and Freddie Mac had not received "exceptional assistance" and therefore did not have to have their pay decisions scrutinized by the pay czar.
As poorly as these two institutions have performed over the past year, the possibility of their executives receiving their $6 million pay seems ridiculous.
In 2009 the credit lines for each of them were already increased from $100 billion to over $200 billion, and now they are requesting to have that amount doubled again to total more than $800 billion, which is backed only by our governments willingness to pay the interest, with taxpayer dollars. Having received at least $100 billion in tax payer bailout moneys already, the lending giants can't seem to find stable ground.
Typically they buy mortgages from banks and bundle them for re-sale to investors who desire the yield indicated. Together, they own or guarantee almost 31 million home loans worth about $5.5 trillion, or about half of all mortgages, reports indicate. Add in the 100's of billions of dollars in securitizations remaining to be included in their balance sheets and you can see just how bleak things are for tax payers.
Under the Treasury's new flexible financing formula, Fannie and Freddie get more taxpayer support based on a formula that takes into account how much each company loses in a quarter. Given President Obama's efforts to stabilize the housing market and stop the slide in housing prices, even with Fannie and Freddie under conservatorship, they have been touted to promote the failed policies pushed by the government.
These efforts have come at a time when the performance of their portfolios has continued to decline and the Administration's plans to address foreclosures have not worked.
With that move, largely ignored in the holiday rush, the White House deftly avoids a nasty, negative headline criticizing the two biggest basket cases in the markets, publicly traded companies who got the biggest total bailouts of all because they are hostage to the Congress's every housing desire.
With Fannie and Freddie quietly failing and requiring more money, the failure of government to manage the housing market has never been so apparent. As home loan defaults continue to skyrocket, Fannie and Freddie each noted in public disclosures that the governments actions take to bailout of the real estate market will cost taxpayers more in the end.
Thus, increasing their lines of available credit is the best, and most secretive way, the administration and legislators can bail them out without attracting a lot more public scrutiny.
Consequently, even more tax payer dollars will go to the undeserved executive bonuses that the leaders of Fannie and Freddie will receive, since they got their bailout money before the initial pay guidelines were in place, and the increase in available credit does technically constitute a bailout.
Unlike Citigroup, Bank of America, AIG, Chrysler, and GM, Congress deemed that Fannie Mae and Freddie Mac had not received "exceptional assistance" and therefore did not have to have their pay decisions scrutinized by the pay czar.
As poorly as these two institutions have performed over the past year, the possibility of their executives receiving their $6 million pay seems ridiculous.
In 2009 the credit lines for each of them were already increased from $100 billion to over $200 billion, and now they are requesting to have that amount doubled again to total more than $800 billion, which is backed only by our governments willingness to pay the interest, with taxpayer dollars. Having received at least $100 billion in tax payer bailout moneys already, the lending giants can't seem to find stable ground.
Typically they buy mortgages from banks and bundle them for re-sale to investors who desire the yield indicated. Together, they own or guarantee almost 31 million home loans worth about $5.5 trillion, or about half of all mortgages, reports indicate. Add in the 100's of billions of dollars in securitizations remaining to be included in their balance sheets and you can see just how bleak things are for tax payers.
Under the Treasury's new flexible financing formula, Fannie and Freddie get more taxpayer support based on a formula that takes into account how much each company loses in a quarter. Given President Obama's efforts to stabilize the housing market and stop the slide in housing prices, even with Fannie and Freddie under conservatorship, they have been touted to promote the failed policies pushed by the government.
These efforts have come at a time when the performance of their portfolios has continued to decline and the Administration's plans to address foreclosures have not worked.
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