So far, the American taxpayer is on the hook for $145 billion worth of bailouts to federal-government-created and government-subsidized Fannie Mae and Freddie Mac.
Those federal mortgage organizations played a big role in the housing crisis by loosening their lending rules. Many Americans with poor credit got mortgages they should not have been able to get at all. And many who might have had good enough credit for a small mortgage were allowed to borrow much more than they should have.
Lots of borrowers have since lost their homes to foreclosure, and many more are likely to lose their homes in coming months.
But incredibly, as Congress seeks to reform the financial system, mismanaged Fannie Mae and Freddie Mac are getting a pass. They continue to lose money hand over fist, recently saying they need an additional $8.4 billion from taxpayers.
Unfortunately, it appears they will get that — and much more. The Obama administration originally said it would cover Fannie Mae’s and Freddie Mac’s losses up to “only” $400 billion. But then administration officials said unlimited losses at Fannie Mae and Freddie Mac would be covered — and that it is too soon to consider reforming them.
That only adds to the federal government’s irresponsibility where Fannie Mae and Freddie Mac are concerned.
Members of Congress pressured the companies to accept risky mortgages. The goal was to promote “fairness” to borrowers with poor credit. But when warnings were issued about that mountain of dangerous debt, congressional liberals kept charging ahead, demanding more “affordable housing” and more “fairness.” They said there was no crisis at Fannie Mae and Freddie Mac, and they accused those who were concerned about the situation of exaggerating.
Those members of Congress have never been held to account for their poor judgment. And now, even when the disaster to which they contributed is plain for all to see, many show little interest in real reform.
Does that give you confidence that our nation’s leaders are doing what must be done to get us out of the mortgage mess and put us on a sound path to prosperity?