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The Spectacle Blog
Fannie Mae (FNM) and Freddie Mac (FRE), the unholy devourers of taxpayer money in service of liberals' utopian visions of letting people with low incomes own homes they can't afford, are to be delisted from the New York Stock Exchange because of stock prices trading under $1 per share for more than 30 trading days. This despite the fact that the two have swallowed more than $145 billion of taxpayer money with expectations for further losses ranging from $160 billion to $1 trillion more, according to a must-read Bloomberg News article.
Both stocks fell a further 40% on Wednesday morning in response to the news.
At 55 cents per share, the market capitalization of Fannie Mae (based only on outstanding common stock) is just barely over $600 million. At 67 cents per share, Freddie Mac's common shares are worth about $435 million However, those numbers massively overstate the value of the firms: as the WSJ notes, the combined equity of these firms is estimated to be "negative $146.9 billion." If they weren't on the heart-lung machine that is the American taxpayer, the plug would have been pulled long ago.
Since the beginning of 2008, investors who owned stock in FNM and FRE have suffered combined losses of about $60 billion, despite the companies sucking more than twice that amount from the federal Treasury, which is to say from all of us. If you start counting just six months earlier, in mid-2007, the losses are over $100 billion.
There has perhaps never been a more expensive demonstration of the horrendous unintended consequences of do-gooder Progressivism and a pursuit of "social justice" combined with a Republican Party without the backbone to do anything about the march to bankruptcy for fear of being called "mean."
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More Blog Posts by Ross Kaminsky
http://spectator.org/blog/2010/06/16/how-worthless-can-they-be
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Richard Meade| 6.16.10 @ 2:05PM
And they don't even show up on the Federal balance sheet. This disgusting.
Oldefarte| 6.16.10 @ 2:20PM
Ross, very well said indeed. Thank you. Fannie/Freddie were the government vehicles that parlayed the CRA of 1977 into effective action, and which made 'AFFORDABLE HOMES' [actually UNAFFORDABLE would be more precise] a reality for the indigent constituents of the Democratic Party!!!!!!!
Warrior| 6.16.10 @ 5:23PM
Maybe Bawney Fwank can restate how the companies are a solid investment. From July 14, 2008 - "I think this is a case where Fannie and Freddie are fundamentally sound, that they are not in danger of going under. They're not the best investments these days from the long-term standpoint going back. I think they are in good shape going forward.
They're in a housing market. I do think their prospects going forward are very solid. And in fact, we're going to do some things that are going to improve them."
SONAMERICANREVOLUTION| 6.20.10 @ 1:28PM
BARNIE FRANKIE IS SUCKING LITTLE FRANKS RIGHT NOW!
Eric| 6.16.10 @ 2:56PM
Just think, if "We the people" were able to declare bankruptcy--under the cram down legislation, that the house and senate COULD have passed--but chose not to; we would not be in this situation. .
We would all still owe on the mortgages and only half of the 146.9 billion would have been paid in default status.
Way to go congress.
We need to vote you back in for more good works that you provide for us "We the people".
Way to make our nation strong...
Disgusted| 6.16.10 @ 4:56PM
What on earth makes the author of this piece believe the consequences were UNintentional??? I don't believe that for one minute. I bet they knew damn well what the fallout from the bailout would be when they did it. They've actualized all the numbers out to their conclusions. They know we're hosed economically. Don't be so naive.
roberto| 6.16.10 @ 5:18PM
Another liberal social engineering disaster. Reminds me of Johnsons Great Society where the Federal government built inner city apartments for free living; all crack houses and dilapidated buildings now.
I agree with "Disgusted" - Politicians all care about the next election so they intentionally attempt to buy votes via schemes like Fannie Mae and Freddie Mac.
PolishKnight| 6.17.10 @ 10:39AM
Roberto, that's not entirely true. The dream of leftist politicians is to make elections irrelevent to their personal power base. It's no wonder that they love illegals from Latin American countries. The banana republics are largely powerless, ignorant masses who can do nothing about the mafioso chieftans who live behind razor wire in their multi-million dollar estates and control most of the industries. If someone dares run against them in an election, they either bribe them into the club or have them killed.
The useful idiots in those countries, and this one, like to think that THEIR politician will be different and will play the corrupt power game but will honor their promises to them and build that socialist utopia. Yeah, sure. There's a train leaving for that utopia right now, Comrade and you're getting on it whether you want to or not.
I'll give the left credit for at least APPEARING to care about their electorate. The Republican establishment happily sells out their voting base either for short term financial interests (save money on hotel rooms with illegal labor) OR have their chivalry work against them. Those crack houses were supposed to be for "innocent women and children".
David| 6.16.10 @ 10:34PM
USA is being systematically destroyed as was the USSR destroyed.
for there can be no challenge to the one world govt from any state now or in the future .
Yosemeti Sam| 6.17.10 @ 12:46AM
Fanny and Freddie to taxpayers - hey chump, can you spare a dime?
Greedy FatCat CEO| 6.17.10 @ 11:01AM
And people hated the Wall Street bonuses. How much did the people who run Fannie and Freddie take home? On our dime? I can hardly wait for Fannie Med!
Tim| 6.17.10 @ 6:22PM
Unfortunately the people who are responsible for this...who lied to us and continued with this train wreck...have and will walk away unscathed. Dodd, Frank, Raines...to many to name