Freddie Mac Seeks Billions More After Big Loss
By THE ASSOCIATED PRESS
Published: May 5, 2010
WASHINGTON (AP) — Freddie Mac is asking for $10.6 billion in additional federal aid after posting a big loss in the first three months of the year.
The new request will bring the total bill for rescuing Freddie Mac, which has been effectively owned by the government since nearly collapsing in September 2008, to $61.3 billion.
Freddie Mac said Wednesday that it lost $8 billion, or $2.45 a share, in its first quarter. The results compared with a loss of $10.4 billion a year earlier. The most recent quarter includes $1.3 billion in dividends paid to the Treasury Department.
The company, however, cautioned that new accounting standards made it difficult to compare the most recent quarter with the year-earlier period. In the first quarter of this year, Freddie Mac was forced to bring $1.5 trillion in assets and liabilities onto its balance sheet, causing the company’s net worth to fall by $11.7 billion.
Created by Congress, Freddie Mac and its sibling company, Fannie Mae, buy mortgages from lenders and package them into bonds that are resold to global investors. As the housing bubble burst, they were unable to raise enough money to stay afloat, and the government effectively nationalized them.
The total taxpayer bill for both is now about $136 billion.
http://www.nytimes.com/2010/05/06/business/06freddie.html
Originally posted by utherpendragonThe whole concept behind their creation and operation has been the absurd premise that it should be made easier for people to buy houses that they fundamentally cannot afford.
Freddie Mac Seeks Billions More After Big Loss
By THE ASSOCIATED PRESS
Published: May 5, 2010
WASHINGTON (AP) —[b] Freddie Mac is asking for $10.6 billion in additional federal aid after posting a big loss in the first three months of the year.
The new request will bring the total bill for rescuing Freddie Mac, which has been effect ...[text shortened]... th is now about $136 billion.[/b]
http://www.nytimes.com/2010/05/06/business/06freddie.html[/b]
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Originally posted by sh76How can that be true when they were prohibited by law from making sub-prime mortgages?
The whole concept behind their creation and operation has been the absurd premise that it should be made easier for people to buy houses that they fundamentally cannot afford.
How did poor people get the power to ruin everything in the whole world? To believe that is absurd. Apparently some people can be fooled all the time.
Originally posted by TerrierJackhttp://en.wikipedia.org/wiki/Freddie_mac
How can that be true when they were prohibited by law from making sub-prime mortgages?
How did poor people get the power to ruin everything in the whole world? To believe that is absurd. Apparently some people can be fooled all the time.
...
In 1995, Freddie Mac began receiving affordable housing credit for buying subprime securities, and by 2004, HUD suggested the company was lagging behind and should "do more." [9]
...
Subprime adjustable rate loans
Freddie Mac announced on February 27, 2007 that it will buy a subprime adjustable rate mortgage only if the borrower qualifies for the maximum rate of the loan, rather than merely a low introductory (so-called teaser) rate.
....
As of 2008, Fannie Mae and Freddie Mac owned or guaranteed about half of the U.S.'s $12 trillion mortgage market.[18] This made both corporations highly susceptible to the subprime mortgage crisis of that year. Ultimately, in July of 2008, the speculation was made reality, when the US government took action to prevent the collapse of both corporations.
...
Originally posted by no1marauderAn overstatement, perhaps.
That is a blatantly false statement.
So, let me ask you to see if you agree or disagree with the underlying premise: Does United States banking, fiscal and tax policy put too much of an emphasis on encouraging people to purchase residences as opposed to renting them?
Originally posted by sh76Government policy has very little to do with people desiring to own their own homes. The problems with the mortgage industry were caused by mortgage companies wanting to approve mortgages that they knew they could then sell to larger banks and financial firms which would then bundle them into securities to be sold to wealthy individuals and institutions. The more mortgages the merrier, so the mortgage companies had little incentive to reasonably ascertain the likely risk of individual mortgagors failing to pay (they wouldn't be holding the mortgages anyway). This was a failure of private firms to adequately gauge risk; it's true that the government, run by free marketers of the Greenspan persuasion, did not force them to adequately gauge risk, but that had far more to do with not wanting to get in the way of rich people getting richer than any supposed preference that more people own homes.
An overstatement, perhaps.
So, let me ask you to see if you agree or disagree with the underlying premise: Does United States banking, fiscal and tax policy put too much of an emphasis on encouraging people to purchase residences as opposed to renting them?
Originally posted by zeeblebotYou mean after all the articles that have been written explaining why the bailouts were vital, you STILL don't understand??
i'm not really getting why obama agreed to the bailouts, tho.
he should've hung the bankers out to dry.
Man, get reading. The whole civilized world was on the edge of ruin. It wasn't a case of just "oh well, some bank is broke so shut them down and nothing happens to anyone else..."
Dude, casuality, dominoe theory, anyone will do. Read.