Fannie Mae, the mortgage giant that lends with the implicit guarantee of taxpayers, is asking the federal government for $7.8 billion in aid to cover losses through July, August, and September of 2011. Fannie Mae announced Tuesday it lost $7.6 million in the third quarter due largely to defaults on the loans it had guaranteed.
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“Fannie Mae was at the heart of the housing boom and is a central cause of the housing bust. It’s been embroiled in multi-billion-dollar scandals. Its executives have received compensation every bit as outrageous as the worst of the compensation abuses at the big Wall Street firms. Now it’s draining taxpayers dry.
“The nation should abolish Fannie Mae and Freddie Mac and replace them with nothing. Let buyers, sellers, and lenders reach their own deals free from government manipulation and behind-the-scenes maneuvering of corrupt politicians and bureaucrats.”
Steve Stanek
Research Fellow, Budget and Tax Policy
The Heartland Institute
Managing Editor
Budget & Tax News
[email protected]
815/385-5602
“Fannie and Freddie are beyond repair. Although doing so will certainly be painful, Congress should give real consideration to winding down their operations altogether. Doing so will be expensive and would almost certainly mean an end to the 30-year self-amortizing mortgage with a modest down payment. But it may well be the only option to secure the country’s financial future.”
Eli Lehrer
Director, Center on Finance, Insurance, and Real Estate
Vice President, DC Operations
The Heartland Institute
[email protected]
202/615-0586
“Incredible. Fannie Mae has received already $112.9 billion, the most expensive bailout of any company so far, and they are now asking for an additional $7.8 billion. Together with its evil twin, Freddie Mac, these financial zombies have consumed $169 billion of taxpayers’ livelihoods.
“These subsidy welfare agencies should be closed immediately. On the altar of ‘affordable housing,’ Congress has already sacrificed millions of American jobs, forced the collapse of the financial system due to junk housing bonds, and destroyed the American housing dream for millions of young families in the future. It is time to liquidate the subsidy system and abolish Fannie Mae and Freddie Mac.”
Joe Cobb
Policy Advisor, Economics
The Heartland Institute
[email protected]
623/363-6369
“This ought to be seen as a much bigger scandal than Solyndra, which is saying a lot. Government loan guarantees to individuals are just as economically distorting as government loan guarantees to businesses – and their results are multiplied by millions because of the number of homeowners in the nation. Thus the Fannie-Freddie spending spree has made a mess of the housing market and resulted in unsustainable debt loads, as the previous tens of millions of dollars of bailouts made clear.
“The only solution is to let Fannie and Freddie shut down, while repealing regulations that force banks to lend to unqualified mortgage borrowers. It will be a painful process for many, but it will quite rapidly lead to realistic housing prices and actually bearable mortgages for homeowners.”
S.T. Karnick
Director of Research
The Heartland Institute
[email protected]
312/377-4000
The Heartland Institute is a 27-year-old national nonprofit organization with offices in Chicago, Illinois; Washington, DC; Austin, Texas; Tallahassee, Florida; and Columbus, Ohio. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site or call 312/377-4000.
