Regardless of the recent news of Fannie Mae turning some profit, the fact that these two GSEs have cot the US taxpayers at least $100 Billion since the real estate crash, these other numbers don’t make me feel good either:
• Former Fannie Mae Franklin Raines made $91 million from 1998 thru 2003;
• Top five (5) Fannie Mae executive earned $34 million in compensation;
• Top executives at Freddie Mac earned $35 million in 2006;
• In 2009 (after the downturn in mortgage business), the top five (5) executives at Fannie Mae made $19 million, collectively. The CEO earned $6 million;
• From 2001 through 2006, Fannie Mae spent $123 million to lobby Congress (second highest total lobbying expenses in the US);
• Alt-A loans accounted for 9% of Fannie Mae’s business but represented 40% of credit losses in 2009;
• Losses as of 5-10-2010 have amounted to $146 billion – the ceiling of debt losses back by the Federal Government (i.e., taxpayers) had been raised to (and expected to reach) $400 billion;
• Both Fannie and Freddie were delisted from the New York Stock Exchange;
• Armando Falcon (former head of Fannie’s and Freddie’s Federal regulator) said they had a culture of arrogance and greed and the failure of management that caused their collapse;
• By June 2010, 5.1 million homeowners will own a home worth 75% or less of the mortgage amount Broker’s Blog 2-3-2010; and
• Fannie, Freddie, and the FHA now comprise 90% of mortgages.
No prosecutions, investigations, or correction of this mismanagement:
As a side note (per WSJ 4-9-2010-page 4B) – Robert Rubin (former Treasury Secretary under Clinton and former Chairman of the Board at Citigroup) said that everyone in the industry failed to see this crises…
Does that give you faith and confidence in the entire financial and regulatory system?
UPDATE 8-9-2010: Per the 8-6-2010 WSJ page A2, loans acquired since the beginning of 2009 have performed better than in the past due to “tighter lending standards” by Fannie and Freddie….well a little late don’t you think? DUH! (Oh and Fannie and Freddie have required $146 billion since 2008 to cover losses on loans they purchased.)