Freddie Mac profit jumps; will pay U.S. Treasury $4.4 bln

[cali]

Freddie Mac, the U.S.-owned mortgage finance company, on Wednesday said its second-quarter profit surged 65 percent to $5.0 billion, its second largest ever, as rising home prices limited credit losses and it booked big gains on derivatives that benefited from rising interest rates.

That big profit and another like it expected soon from larger sister Fannie Mae are fast becoming the centerpiece of the debate over housing-finance reform, which has languished since taxpayers stepped in to rescue the pair to the tune of nearly $188 billion during the financial crisis.

The fact that Freddie and Fannie have turned from taxpayer-financed money pits to cash cows for the federal budget is certain to complicate reform efforts just gaining momentum in Washington. The president weighed in on the issue on Tuesday, calling for a smaller government role in the mortgage market.

Freddie Mac, which has operated under federal conservatorship since it was seized in 2008 during the financial crisis, said that based on its net worth of $7.4 billion, it will make a dividend payment of $4.4 billion to the U.S. Treasury as part of the reimbursement for its rescue aid.

<snip>

http://www.reuters.com/article/2013/08/07/usa-freddiemac-results-idUSL1N0G80GK20130807

[leftstreet]

1. So why does Obama want to 'wind this down?'

PHOENIX — President Obama hailed both this city’s and the country’s comeback from the housing bust on Tuesday, and said it was now time to reduce the federal role and risk in the mortgage market “to make sure the kind of crisis we went through never happens again.”

He proposed to “wind down” Fannie Mae and Freddie Mac, for the first time outlining his approach to overhauling the two giant mortgage-finance companies that were taken over by the government when they failed nearly five years ago. The companies, which Mr. Obama described in an appearance here as “not really government, but not really private sector,” recently began to repay taxpayers.

http://www.nytimes.com/2013/08/07/us/politics/obama-fannie-mae-freddie-mac.html?_r=0

[ProSense]

2. Freddie Mac is a private entity in receivership just like AIG was.

It is not government-owned.

Both Freddie Mac and Fannie Mae are required to pay everything above $3 billion to the Treasury in return for taxpayer aid under existing bailout terms.

The two companies have paid nearly $132 billion in dividend payments. Freddie expects to pay the Treasury the $4.4 billion dividend payment by September, bringing Freddie's total to roughly $41 billion as the amount of dividends it will have paid to the Treasury. The company has drawn $71 billion in federal aid, which leaves taxpayers on the hook for about $30 billion.

The administration is proposing a way out of the bailout status and to ensure no furture bailouts.

[cali]

3. not even close. stop putting misinformation out. it's a disservice that you appear to

uniquely qualified to perform. You should stop it. Claiming it's just like AIG is false. You know that. What you're doing is inexcusable.

AIG is a wholly private corporation.

http://en.wikipedia.org/wiki/AIG

Freddie Mac is a public/private hybrid. It was created by Congress.

It's a GSE.

A government-sponsored enterprise (GSE) is a financial services corporation created by the United States Congress. Their intended function is to enhance the flow of credit to targeted sectors of the economy and to make those segments of the capital market more efficient and transparent, and to reduce the risk to investors and other suppliers of capital. The desired effect of the GSEs is to enhance the availability and reduce the cost of credit to the targeted borrowing sectors primarily by reducing the risk of capital losses to investors: agriculture, home finance and education. The two most well known GSEs are the Federal National Mortgage Association, or Fannie Mae, and the Federal Home Loan Mortgage Corporation, or Freddie Mac.[1]

Congress created the first GSE in 1916 with the creation of the Farm Credit System; it initiated GSEs in the home finance segment of the economy with the creation of the Federal Home Loan Banks in 1932; and it targeted education when it chartered Sallie Mae in 1972 (although Congress allowed Sallie Mae to relinquish its government sponsorship and become a fully private institution via legislation in 1995). The residential mortgage borrowing segment is by far the largest of the borrowing segments in which the GSEs operate. GSEs hold or pool approximately $5 trillion worth of mortgages.[2][3][4] For a comprehensive list of articles discussing Fannie Mae, Freddie Mac, and Government-Sponsored Enterprises, see Fannie Mae and Freddie Mac: A Bibliography.[5]

http://en.wikipedia.org/wiki/Government-sponsored_enterprise

http://home.howstuffworks.com/real-estate/mortgage16.htm

http://www.economist.com/node/15011307

http://www.americanprogress.org/issues/housing/report/2012/09/06/36736/7-things-you-need-to-know-about-fannie-mae-and-freddie-mac/

http://www.washingtonmonthly.com/archives/individual/2008_07/014108.php

[ProSense]

4. You know

"not even close. stop putting misinformation out. it's a disservice that you appear to uniquely qualified to perform. "

...damn well it's not "misinformation," as I pointed this out to you in another thread.

Four decades ago, Congressional charters set up Fannie Mae and Freddie Mac as government-sponsored enterprises (GSEs)--privately owned financial institutions established by the government to fulfill a public mission. The two GSEs were created to provide a stable source of funding for residential mortgages across the country, including loans on housing for low- and moderate-income families. Fannie Mae and Freddie Mac carry out that mission through their operations in the secondary mortgage market. They purchase mortgages that meet certain standards from banks and other originators, pool those loans into mortgage-backed securities that they guarantee against losses from defaults on the underlying mortgages, and sell the securities to investors--a process referred to as securitization. In addition, they buy mortgages and MBSs (both each other’s and those issued by private companies) to hold in their portfolios. They fund those portfolio holdings by issuing debt obligations, known as agency securities, which are sold to investors.

http://www.democraticunderground.com/10023417828#post53

[cali]

5. And I pointed out to YOU numerous times that it is a hybrid and you are

posting utter misinformation- to put it kindly- when you claim it's just like AIG or other private corporations.

I've provided you with a slew of links that are definitive.

STOP POSTING MISINFORMATION. It's reprehensible.

[ProSense]

6. Fannie and Freddie are private entities. No amount of screaming "misinformation" changes that. n/t

[cali]

7. They are not strictly private and I've posted proof of that so

no matter what you falsely claim, anyone clicking on the links can quickly discern just what you are up to with your misinformation campaign.

I've posted PROOF from government sites that you are being less than honest when you say it's just like any other private corporation- like AIG.

I fear for you. honestly. You're down the rabbit hole.

[ProSense]

8. They're private, and

"They are not strictly private and I've posted proof of that so no matter what you falsely claim, anyone clicking on the links can quickly discern just what you are up to with your misinformation campaign."

..."strictly" is semantics. Do you think the government should continue funneling money into these entities:

Fannie, Freddie execs score $100 million payday
http://money.cnn.com/2011/11/15/news/companies/fannie_freddie_executive_pay/

Here is the current CEO:

Timothy J. Mayopoulos is Fannie Mae's president and chief executive officer (CEO), and a member of the company's Board of Directors.

As President and CEO, Mr. Mayopoulos is focused on ensuring that the company continues to manage its legacy issues effectively, while driving the company’s contributions to creating a better housing finance system for the future. Under his leadership, Fannie Mae will continue to play an essential role in funding the market, assisting troubled homeowners, strengthening communities, and repaying taxpayers’ investment in the company.

Mr. Mayopoulos brings more than 25 years of experience to his leadership post. He joined Fannie Mae in April 2009 as executive vice president, general counsel, and corporate secretary and was appointed chief administrative officer in 2010. Prior to joining Fannie Mae, Mr. Mayopoulos was executive vice president and general counsel of Bank of America Corporation. Previously, he served in senior management roles at Deutsche Bank AG, Credit Suisse First Boston, and Donaldson, Lufkin & Jenrette, Inc. Earlier in his career, Mr. Mayopoulos was in private practice. He is a graduate of Cornell University and the New York University School of Law.

http://www.fanniemae.com/portal/about-us/company-overview/leadership/mayopoulos.html#

[cali]

9. keep bleating, pro

GSEs are public/private hybrids and nothing like AIG. It's not semantics. It's a fact. You need to stop making your false claims which you do in order to mislead people. It's reprehensible.

Created by Congress. Got that? They would not exist if it weren't for the Federal Government. And individual or consortium can't create one. Freddie is publicly chartered.

A government-sponsored enterprise (GSE) is a financial services corporation created by the United States Congress. Their intended function is to enhance the flow of credit to targeted sectors of the economy and to make those segments of the capital market more efficient and transparent, and to reduce the risk to investors and other suppliers of capital. The desired effect of the GSEs is to enhance the availability and reduce the cost of credit to the targeted borrowing sectors primarily by reducing the risk of capital losses to investors: agriculture, home finance and education. The two most well known GSEs are the Federal National Mortgage Association, or Fannie Mae, and the Federal Home Loan Mortgage Corporation, or Freddie Mac.[1]

Congress created the first GSE in 1916 with the creation of the Farm Credit System; it initiated GSEs in the home finance segment of the economy with the creation of the Federal Home Loan Banks in 1932; and it targeted education when it chartered Sallie Mae in 1972 (although Congress allowed Sallie Mae to relinquish its government sponsorship and become a fully private institution via legislation in 1995). The residential mortgage borrowing segment is by far the largest of the borrowing segments in which the GSEs operate. GSEs hold or pool approximately $5 trillion worth of mortgages.[2][3][4] For a comprehensive list of articles discussing Fannie Mae, Freddie Mac, and Government-Sponsored Enterprises, see Fannie Mae and Freddie Mac: A Bibliography.[5]
http://en.wikipedia.org/wiki/Government-sponsored_enterprise

[ProSense]

10. Here's a little exercise

From your link:

List of GSEs[edit source]

Housing[edit source]
The twelve Federal Home Loan Banks (FHLBanks) (1932)
Federal National Mortgage Association (Fannie Mae) (1938)
Federal Home Loan Mortgage Corporation (Freddie Mac) (1970)
Financing Corporation (FICO) (1987)

See that date: 1938?

Follow the link, and you'll find this:

The Federal National Mortgage Association (FNMA), colloquially known as Fannie Mae, was established in 1938 by amendments to the National Housing Act[5] after the Great Depression as part of Franklin Delano Roosevelt's New Deal. Fannie Mae was established to provide local banks with federal money to finance home mortgages in an attempt to raise levels of home ownership and the availability of affordable housing.[6] Fannie Mae created a liquid secondary mortgage market and thereby made it possible for banks and other loan originators to issue more housing loans, primarily by buying Federal Housing Administration (FHA) insured mortgages.[7] For the first thirty years following its inception, Fannie Mae held a monopoly over the secondary mortgage market.[8]

It was acquired by the Housing and Home Finance Agency from the Federal Loan Agency as a constituent unit in 1950.[9] In 1954, an amendment known as the Federal National Mortgage Association Charter Act[10] made Fannie Mae into "mixed-ownership corporation" meaning that federal government held the preferred stock while private investors held the common stock;[5] in 1968 it converted to a privately held corporation, to remove its activity and debt from the federal budget.[11] In the 1968 change, arising from the Housing and Urban Development Act of 1968, Fannie Mae's predecessor (also called Fannie Mae) was split into the current Fannie Mae and the Government National Mortgage Association ("Ginnie Mae&quot .

Ginnie Mae, which remained a government organization, supports FHA-insured mortgages as well as Veterans Administration (VA) and Farmers Home Administration (FmHA) insured mortgages. As such Ginnie Mae is the only home-loan agency explicitly backed by the full faith and credit of the United States government.[12]

It's private.

[cali]

11. nope. it is a public private/hybrid. Why that's so hard for you to admit, I don't know

Even the U.S. government designates it as such.

Now I'll let you have the last words as it's clear that you won't let reality interfere with your mission.