Sunday, March 24, 2013

Mortgage Giants Gouge the Taxpayers With No End in Sight

In Gretchen Morgenson's article in today's New York Times she dissects how much the government owned mortgage insurers Fannie Mae and Freddie Mac drain the tax-payer with no hope of recouping the money.  Because the private mortgage market won't step in, Fannie and Freddie insure mortgages up to $417,000.  Any monies they make go directly to the Treasury, not to taxpayers.

And they're still in the red costing taxpayers hundreds of billions of dollars:

Last fall, the regulator charged with overseeing Fannie and Freddie estimated that the taxpayer bill for the companies could be $200 billion by the end of 2015.
 The chief executives who ran the companies into the ground made huge amounts of money.  For instance, Franklin Raines, former head of Fannie Mae, was paid $90 million from 1998-2004.  He still is on the taxpayer dole after replacement.  Not only does the taxpayer guarantee retiree pensions, he/she also pays their legal bills:

[F]rom September 2008 through 2012, taxpayers also spent $114 million for legal bills racked up by former executives and directors testifying in lawsuits relating to the accounting scandals or financial crisis inquiries.
If this money was taken out of these entities and returned to the taxpayer, that amount alone could stimulate the economy further.

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