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Obama Looted Fannie Mae and Freddie Mac


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President Obama never was shy about using his phone and pen to achieve what he could not get from Congress on regulatory matters.
But documents revealed last week show the Obama administration may have been willing to get around congressional decisions on spending by using a slush fund of sorts funded by the profits of Freddie Mac and Fannie Mae, the two government-sponsored home loan giants.Fannie and Freddie are federally chartered enterprises which buy mortgage loans from banks and bundle them into securities that are sold to investors, thus freeing up capital so that banks can make more home loans.


They are government-sponsored enterprises, which means the government guarantees their loans. But they are run as private enterprises, with private leadership, a board of directors and, most significantly for this purpose, investors. They’re even listed on the stock market.

In response to the mortgage crisis of 2008, Congress passed the Housing and Economic Recovery Act, which provided $187.5 billion in government loans for Fannie and Freddie and placed them in conservatorship under the newly established Federal Housing Finance Agency.
But Fannie and Freddie were not in such bad shape after all, and in just a few years, they were turning profits and on course to pay back the government with interest and still have money to pay dividends to their investors.
In 2012, the Obama administration came up with a plan to divert those profits to the Treasury that became known as the Net Worth Sweep. Officials said the profits had to be diverted back into the Treasury because Fannie and Freddie were in a “death spiral” and would have to return for loans, and this money would be used for those loans. In other words, Treasury would take all the profits from Fannie and Freddie and hold them for future loans when they again found themselves in trouble.
But -- the administration knew Fannie and Freddie were healthy for the long term, were unlikely to need any more loans and, in fact, had enough money to pay dividends. The dividends were a problem for the administration because it made it hard to explain why it needed to abscond with Fannie and Freddie’s $241 billion in profits, execute an improper taking against the shareholders, and spend the money without congressional approval. Some even pushed to change accounting methods to make Fannie and Freddie look worse on paper and/or force them to “need” loans to survive.
:snip:

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25 minutes ago, clearvision said:

Big Gov just doing what it does.

So many people have used these as their own personal cookie jar going back 20 years, some of it I believe to be actually criminal. As with many other things, no one has gone to jail and some of them are multi millionaires now - also a good part of the financial melt down that caused this country and so many people so much grief. I get so disgusted when I think of it.

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Fannie and Freddie could need $100 billion bailout in next crisis, stress test finds

 

Fannie Mae and Freddie Mac could need a taxpayer bailout of as much as $99.6 billion if a severe economic downturn gripped the U.S., their regulator said Monday.
The Federal Housing Finance Agency released the results of a stress test that examined how the mortgage finance companies would perform in what’s called a “severely adverse scenario.” The stress test was mandated by the post-financial-crisis Dodd-Frank Act and the specifics of the scenario were devised by the Federal Reserve.
The test found that Fannie FNMA, +2.61%   and Freddie FMCC, +3.16%   together would require between $34.8 and $99.6 billion, FHFA said. That’s an improvement from last year, when FHFA said the enterprises would need $125.8 billion.

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