What the hell? I thought the economy was strong!
Freddie Mac FMCC, -1.29% is expected to report a loss when it announces first-quarter earnings before the bell on Tuesday. That’s bad news for any public company, but especially critical for the mortgage provider because of its tangled history with the federal government.
Freddie and its counterpart, Fannie Mae FNMA, -1.76% were put into conservatorship in 2008 as the mortgage meltdown ensnared the financial system. They have lingered as wards of the state ever since. The Treasury Department modified the deal in 2012, requiring Fannie and Freddie to send all quarterly profits to the government — and shrink their reserves to zero by 2018.
As Mel Watt, the chairman of Fannie and Freddie’s regulator, put it in a speech in February, Fannie and Freddie are quickly approaching the point where they won’t be able to weather quarterly losses without going back to the Treasury for taxpayer dollars.
21 Feb ’12
Things like this are why I am so against some of these radical budget increases proposed by our current crop of presidential candidates. The economy is NOT strong. Unemployment is NOT down. The FED is NOT in control of inflation.
The last thing we should be doing is spending a bunch of extra money on more stuff we can't afford. This whole thing has become some kind of surreal Keynesian nightmare, and if we don't take it seriously soon we're in for a rude awakening.
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