Tuesday, August 10, 2010

Government-Sponsored Mortgage Giant Seeks $1.8 Billion More in Bailouts

Mortgage giant Freddie Mac is seeking $1.8 billion more in bailouts from the federal government. This mortgage giant, and its sister company, Fannie Mae, are expected to ultimately receive over $400 billion in bailouts. Fannie and Freddie helped spawn the mortgage crisis by buying up risky sub-prime mortgages and repackaging them as prime mortgages, thus creating an artificial market for junk. Meanwhile, they paid their CEOs millions, and engaged in massive accounting fraud–$6.3 billion at Fannie Mae alone–to increase the size of their managers’ bonuses. As Government-Sponsored Enterprises, they were exempt from the capital requirements that apply to private banks, so they did not have enough reserves to cover their losses when their mortgages started defaulting. Even administration officials admit they were a “core part of what went wrong” in our financial system. But the recent financial “reform” law signed by Obama does nothing to reform these mortgage giants. Instead, it’s 2,315 pages of payoffs for special interests. (Obama received $125,000 in contributions from Fannie Mae and Freddie Mac executives.)...more

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