Occupy Fannie and Freddie!

Occupy Fannie Mae!

Occupy Freddie Mac!

Occupy Wall Street is occupying the wrong place. It always has been.

They should be occupying a corporate headquarters in the Cathedral Heights neighborhood of Washington DC and another one in the DC suburb of McLean, Virginia… but they aren’t.

That is where the headquarters of Fannie Mae and Freddie Mac are.

Huh? What you talkin’ about, Willis!?

Corporate bailouts of Wall Street financial institutions have always deservedly been a primary target of both the Occupy Movement and the Tea Party Movement.

However, both movements have mistakenly put the primary blame on the wrong corporations. They should be singling out Fannie Mae and Freddie Mac for specialized attention… but they aren’t.

Why should Fannie and Freddie be occupied?

Lets Count the Reasons…

First off, most people have never heard of them. Probably only a few Tea Party folks even know what those companies are. None in the Occupy Movement know. They are totally clueless.

Next, even in the last couple days both corporations continue making headlines for bailouts and behavior that will ultimately cost the 99% many $100s of billions of dollars:
Freddie Mac Seeks $6 Billion Bailout After Worst Quarterly Loss This Year
– Huffington Post, Margaret Chadbourn, Reuters, 11/3/2011
U.S. Investigates Fannie Mae
– Wall Street Journal, Nick Timraos, 11/1/2011

The latest news has Freddie seeking MORE bailout money that will never be paid back and Fannie employees are under federal criminal investigation for the type of mortgage fraud that collapsed the economy.

Next, though justly deserving of our disgust for their part in the Great Recession, Wall Street bailouts won’t cost taxpayers one thin dime. That money is already paid back and we will make a tidy profit from them!

Lastly, when all is said and done, Fannie and Freddie alone may cost those of us among the 99% more than $300 billion without anyone so far called to account for it!

Who are Fannie and Freddie?

Fannie Mae and Freddie Mac are GSE’s. A GSE is a government sponsored enterprise. GSE’s are privately run, public corporations backed by the federal government but financed primarily by private capital investment.

The federal government created Fannie and Freddie to make low interest home mortgage loans to low income Americans so that they, too, could realize the America dream of home ownership.

Freddie and Fannie approved literally every toxic sub-prime mortgage loan in existence. That rocketed home values skyward. It created the housing bubble that inevitably collapsed under a mountain of bad debts. Home values still haven’t recovered.

Much like Wall Street investors get yearly bonuses, corporate officials at Freddie and Fannie made hundreds of millions in bonuses paid to them based on the number of loans they approved, packaged and passed off to Wall Street.

With a lot of help from Wall Street firms who repackaged and resold them to their own investors, that is what caused the Great Recession.

Taxpayers Get Shafted!

Fannie and Freddie were the recession’s first major casualties on September 6, 2008. They were deemed “to big to fail” and the feds took over both of them. That was before Lehman Brothers went bankrupt a week later on September 15th.

Lehman’s and Wall Street got all the bad press, Freddie and Fannie got none.

Unfortunately for the 99%, the downside of the federal government takeover was that U.S. taxpayers got stuck for all their bad debt.

Heck, Fannie and Freddie bailouts aren’t even part of the much protested ‘bailouts of the big banks’.

Surprise! A Profit from the “Bailouts of the Big Banks”

Otherwise known as the Troubled Asset Relief Program (TARP), the latest accounting of the bank bailouts is found in this October 2011 U.S. Treasury report:
TARP: Three Year Anniversary Report
– U.S. Treasury Department, Downloadable PDF Report, 10/4/2011

The ‘big bank bailouts’ subsection of TARP spent the most money and is called “The Capital Purchase Program” (CPP). There is a CCP snapshot as of 8/31/2011 found on page 11.

It is reported there that the total amount invested was $204.9 billion and the largest single amount invested was $25 billion. Loans were made to 707 financial institutions with 464 left yet to repay their loans.

Here is the kicker… total return into the U.S. Treasury from the CCP is already $208.9 billion.

In other words, we taxpayers have already made $4 billion in pure profit off the bailouts of the big banks with over 450 institutions out there yet to pay us back!

The much hated Bank of America got a $20 billion bailout loan which it paid back in one year and made us taxpayers a $2 billion profit in interest payments. Taxpayers made a whooping $6.85 billion in profit from another hated big bank – Citigroup.

The Treasury Department estimates the CCP will eventually earn taxpayers $20 billion total free and clear.

The Bummer of Fannie and Freddie

No such luck with Freddie and Fannie!

Freddie and Fannie will only cost taxpayers more and more in bailouts that will never be paid back. Freddie is asking for $6 billion more right now.

According to a June 2011 Congressional Budget Office (CBO) Report Freddie and Fannie have already cost taxpayers $154 billion. That makes them, by far, the largest U.S. bailout in history.

The CBO report explains that in the terms of the takeover agreement the federal government will pay an unlimited amount of money for bailouts from now until 2013. After that bailouts will be capped at $400 billion.

Fannie and Freddie are gonna cost us a fortune and most of that will never be repaid.

Conclusions

Occupy Wall Street? Yes, of course… but occupy Freddie and Fannie, too.

They were the catalyst of the Great Recession and will continue to bilk the 99% for years to come.

We may not like them, but at least the big banks paid back their loans with interest.

Freddie and Fannie never will!

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About azleader

Learning to see life more clearly... one image at a time!

Posted on Nov 4, 2011, in bailouts, news, Occupy Movement, Politics, TARP. Bookmark the permalink. 4 Comments.

  1. It is far, FAR to complex an issue to speak to in a sentence or two.

    Instead, I will write an article about the Sanders charges… and it won’t even be able to cover everything. 🙂

  2. good post, added you to my RSS reader.

  3. Bank of America somehow makes cash even though they are one of the worst companies in the World. Would would you let a company like thats have your money?

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