Freddie Mac and Fannie Mae- Blank Checks Are The Best Gifts!

Freddie Mac and Fannie Mae-  Blank Checks Are The Best Gifts

Secretly behind closed doors on the eve of December 24th, while you may have been out shopping for that last minute gift for your loved one, perhaps you were tucking in your children or grandchildren, maybe you were wrapping the last of the gifts to place under your tree- the United States Treasury Department gave you and I a very special gift. 

You are really going to enjoy this gift. Now, I know that because you are in real estate that you may be thinking that this is a gift that will serve your business however, I'll wager to say that I would rather be working hard in this business or start another business rather than unwrap this gift.

The United States Treasury gave Freddie Mac and Fannie Mae a blank check! Unlimited tax payers dollars to keep writing bad loans, keep buying up toxic mortgage securities and to keep sinking those companies deeper into the bottomless pit. So now the Federal Reserve can start cranking up those printing presses in double time.

There are NO limits placed on Freddie and Fannie! Oh and get this- their CEO's are getting $6 Million dollars a year for their salary and NOT one penny of it is coming from stock in the companies. Hmmm, I wonder is that because they know that by the end of 2010- their stock may just be at ZERO?

They gave this gift to Freddie and Fannie after the markets closed. After no one was watching or paying attention. They did this at the 11th hour- right before they would have had to ask Congress for the money. So to avoid asking Congress, they wrote the check themselves through a loop hole in which no permission was needed.

Many bank CEO's get paid a very small salary but get stock dividends. That makes sense, that is called performance based pay. But NO, not Fannie and Freddie. While the Pay Czar is making his visits to the banks telling them to lower executive salaries- they don't even mention this to the executives at Freddie and Fannie. It seems like they are the only ones who don't have to follow the rules.

That all while the losses are immense in those two companies. Fannie and Freddie went into conservator ship in September 2008.  They are in a separate bail out than TARP. We have pumped $400 Billion dollars into these two since then. The losses are going to be much greater.  The Fed bought $1.25 trillion in mortgage backed securities from Freddie and Fannie. Now they are asking for at least $400 Billion more to keep Freddie and Fannie a losing proposition. And we get to pay for it all. 

This is a total policy that is anti-growth. It will not be long before 9/10ths of all mortgages will be Freddie or Fannie. Perhaps that is the goal, to wipe out all the competition and only have the government to underwrite all the loans. It leads me to wonder; what does NAR think about this? Any wagers?

So much for transparency and conversation. So smile as you open your gift- right now we each need to pay Freddie and Fannie $3,800- that is every single tax payer in the U.S. How much more will it be? The government does not have resources. They get this money from us, the tax payers.

Welcome to the world of the unfittest. Where they reward those who are irresponsible with hand outs and punish those of us who are frugal and save money by depleting your pension funds and retirement accounts.