Fannie and Freddie debt now larger than US Gov't

[droski]

At the end of 2009, their total debt outstanding—either held directly on their balance sheets or as guarantees on mortgage securities they'd sold to investors—was $8.1 trillion. That compares to $7.8 trillion in total marketable debt outstanding for the entire U.S. government.

Fannie and Freddie continue to operate deeply in the red, with no end in sight. The Congressional Budget Office estimated that if their operating costs and subsidies were included in our accounting of the overall federal deficit—as properly they should be—the 2009 deficit would be greater by $291 billion

Robert G. Wilmers: What About Reforming Fannie Mae and Freddie Mac? - WSJ.com

But it's the banks that need the reform right?

 

[volinbham]

Thank you Chris Dodd - he's going for one final FU before he leaves office.

 

[volinbham]

Interesting comment - I thought Mr. Transparency was making sure the budget included all applicable components.

Fannie and Freddie continue to operate deeply in the red, with no end in sight. The Congressional Budget Office estimated that if their operating costs and subsidies were included in our accounting of the overall federal deficit—as properly they should be—the 2009 deficit would be greater by $291 billion.

 

[Velo Vol]

"Affordable housing" has its costs.

 

[droski]

every non homeowner taxpayer in this country is getting screwed.

 

[BigPapaVol]

but, those obligations don't account for the value of the underwritten collateral, which would offset that debt massively. My guess is that it's a near 1 to 1 tradeoff.

 

[droski]

but, those obligations don't account for the value of the underwritten collateral, which would offset that debt massively. My guess is that it's a near 1 to 1 tradeoff.

we'll lose hundreds of billions if interests rate rise materially in the next 10 years.

 

[BigPapaVol]

we'll lose hundreds of billions if interests rate rise materially in the next 10 years.

but that only assumes no appreciation in incomes or employment and little to no reworking of mortgages. The better solution is to figure out a way to tie people to their mortgages rather than letting them just walk away scot free from a sinking ship that they willingly purchased previously. Filing bankruptcy in that case is the prudent thing to do, but just hammers the mortgage holder who is forced to sell into a hideous market.

 

[droski]

but that only assumes no appreciation in incomes or employment and little to no reworking of mortgages. The better solution is to figure out a way to tie people to their mortgages rather than letting them just walk away scot free from a sinking ship that they willingly purchased previously. Filing bankruptcy in that case is the prudent thing to do, but just hammers the mortgage holder who is forced to sell into a hideous market.

yes some people will refinance with appreciatoin on income or employment, but the 80s showed us it will not be enough to void an inverse spread and financial ruin. we just aren;t issuing enough 10-30 year treasuries and it's going to kill us longer term.

and a double dip in housing is also a major concern. as you point out walking away from your house is very easy and the lender (in this case the US govt) take a big hit to principle. much larger than the models originally suggested.

 

[BigPapaVol]

yes some people will refinance with appreciatoin on income or employment, but the 80s showed us it will not be enough to void an inverse spread and financial ruin. we just aren;t issuing enough 10-30 year treasuries and it's going to kill us longer term.

and a double dip in housing is also a major concern. as you point out walking away from your house is very easy and the lender (in this case the US govt) take a big hit to principle. much larger than the models originally suggested.

fair enough. There is definitely overhang, but it's not in the ballpark of the numbers being tossed about here.