Tuesday, August 10, 2010

Taxpayers Supporting Freddie's Gambling Addiction

Caution: This will make you angry.

Yesterday it was reported that Freddie Mac lost $4.7 billion in the second quarter and needs another $1.8 billion injection from the government to keep operating. We expect Freddie and Fannie to be losing money due to all of the mortgage defaults that are still taking place. But let's dig a little deeper into the losses.

Buried in the report are the details of the losses for the 2nd quarter (which are actually improved from the first quarter) and you will see the following:
  • net interest income of $4.1 billion
  • minus credit losses of $5 billion
  • minus derivative losses of $3.8 billion
  • Net Loss = $4.7 billion
How did Freddie lose so much in derivatives? They made massive bets on rising interest rates and lost billions as rates fell from April 1 through June 30. We the taxpayers continue to fund their losses every quarter and gives them $$$ to play the interest rate market and lose more $$$.

If they were a public (or private) company they would be out of business. But now they are in control of the federal government and go to the casino with an unlimited piggy bank, thanks to the American Taxpayer and our elected officials who allow it to continue.

No comments:

Post a Comment