Fannie Mae posted another $5.1 Billion loss in the 3Q and is requesting another $7.8 Billion from the Treasury Department. This brings the total Bailout to $112.6 Billion. Their total required annual dividend payment to the Government is now up to $11.3 Billion which is more than Fannie Mae has ever earned in annual net revenue.
If you saw an earlier post of mine with the interview of Professor Karl Case, he had alluded to the potential risk to the housing market by Fannie Mae. I felt like he wanted to come right out and say something but was kind of dancing around the direct point. If you would like re-play that interview, click here. (clip 2:30 – 2:53) It would be interesting to sit down with Professor Karl Case in a one on one conversation off the record to hear what he really thinks.
To be honest, my eyes gloss over when I hear Billions and Trillions and sort of tune out. It is hard for me to comprehend what a Billion is. To put it in some perspective: If you sat down to count from one to one billion, you would be counting for 95 years. Click Here for other perspectives on a Billion. With that in mind, now take 95 years x 112.6 = 10,697 years to count to every dollar Fannie Mae has needed in bailouts.
The market is making a slow recovery, but I am getting a little nervous on the potential risk of having one entity hold all the risk. If I understood Professor Karl Case correctly by reading into what he did say, I think I am in agreement with him.
NEW YORK (CNNMoney) — Losses widened at mortgage giant Fannie Mae in the third quarter, forcing the government-controlled firm to request another $7.8 billion from the Treasury Department.
The company reported Tuesday a net loss of $5.1 billion, compared to a net loss of $2.9 billion in the second quarter. A year ago, Fannie Mae reported a net loss of $1.3 billion.
- Senate wants changes to Fannie, Freddie executive pay (housingwire.com)
- How to fix Fannie and Freddie (housingwire.com)