No man is happy without a delusion of some kind. Delusions are as necessary to our happiness as realities.
Christian Nevell Bovee, 1820-1904, American Author, Lawyer
Meanwhile, taxpayers have pumped more than $125 billion into the failed firms -- and on the hook for many more after the administration promised an unlimited source of funds just before Christmas to backstop their growing losses. "We will do everything necessary to ensure these institutions have the capital they need to meet their commitments," Geithner said in response to tough questions from Rep. Scott Garrett, a New Jersey Republican. Underscoring the need for change, Geithner acknowledged that taxpayers are likely to face "very substantial" losses on the government's takeover of Fannie and Freddie.
Republicans on the panel want to dismantle Fannie and Freddie within five years, arguing that the government-backed firms cost taxpayers too much with little to show for it -- hundreds of billions in taxpayer losses for a housing finance system rife with moral hazard issues and a crowding out of private companies from the market. Full Story
When Geithner states that they will do everything to make sure these institutions have the capital they need to function, he is basically stating that they are willing to use tax payer’s money to fund two worthless entities, instead of dismantling them. Trying to keep these agencies floating is akin to pouring money into a bottomless pit.
One of the old lines was that these two agencies helped make housing affordable by providing an avenue for individuals who would not normally qualify for a mortgage. The following quote was extracted their site.
Fannie Mae works to increase the supply of affordable for-sale and for-rent housing across America by creating customized financing solutions with our housing partners. These financing solutions help ensure stable, livable neighborhoods. Through multiple community development investment funds, Fannie Mae works to tear down barriers, lower costs and increase opportunities for homeownership and affordable rental housing for all Americans. Full Story
They have been a failure in every sense of the word; in trying to provide affordable housing they indirectly provided banks with the incentive to sell as many mortgages as possible. As soon as the deal was closed the banks could get these mortgages of their books by dumping them onto these two agencies.
Some background info…
