Freddie Mac and Fannie Mae Work for the Banks

Written by Anthony Garcia   // September 27, 2011   // 4 Comments


Freddie Mac and Fannie Mae are two government controlled agencies that hold approximately $11 trillion in outstanding mortgages. As you might remember not too long ago these two organizations were on the verge of collapse, that is until tax payers bailed them out with over $150 billion, and an estimated total cost to tax payers of “$224-360 billion” according to Wikipedia. To keep this simple, so it sounds like I know what I’m talking about, these organizations were created to purchase and securitize, mortgage-backed securities, mortgage loans that lenders originated in order to open up the lending market so that lenders could lend more, and borrowers could borrow more.

The interesting thing to not here is that since tax payers are now holding up these two organizations which hold a substantial amount of mortgages, are these organizations going to “bail out” distressed homeowners? We keep hearing that although there have been some indications that the economy is no longer sliding downwards like it was in 2007, 2008, and 2009 the economy is still being severely affected by the housing market. And as of now there are signals that our economy may be headed back down towards another recession.

To answer my own question, “will Freddie Mac and Fannie Mae bail out distressed homeowners?”,  no. Peter S. Goodman, business editor for the Huffington Post wrote an in depth piece on this. Apparently in a Wall St. Journal article the director of one of the agencies would not consider any “bailout” or debt relief for these homeowners, saying something along the lines that he’s accountable to tax payers.

I was quite stunned to read this considering that all homeowners are tax payers, with probably few or little exceptions. I’m not sure what the percentage of the $11 trillion in mortgages are in default or are facing foreclosure, but I will assume that it’s a considerable amount. Otherwise we wouldn’t be having this discussion. I’m sure these distressed homeowners, who pay taxes, which means they own a piece of Freddie and Fannie wouldn’t mind a little relief.

Furthermore, the homeowners that are not in distress wouldn’t mind the fact that if the distressed homeowners were helped out a bit, that may mean that property values wouldn’t continue to drop as easily or rapidly. Let’s also not forget what happens to neighborhoods when they’re rampant with foreclosures. Um, let’s see crime, decrease in revenue for school budgets, degradation of property conditions, small shops and business go under.

Let’s be honest Mr. Director we tax payers no we probably will never see our money that was lent to you. It will get washed up with some shady accounting scheme and since we Americans have such short attention spans, thanks in small part to our media, we won’t even remember a few years from now that you owe us a couple hundred billion. I mean that’s no big deal anyways. Since, that’s the case can you help stabilize the housing market by helping distressed homeowners out?

The funny thing about all of this is that instead of letting banks made all these bad loans, and then had Fannie and Freddie buy these bad loans, therefore forcing tax payers to pick up the tab for the banks. So who do you work for Fannie and Freddie? Oh that’s right the banks, cause we all know you’re not going to help out homeowner’s, even though we bailed you out.

I’m tired of bailing out banks, and this is not limited to just this financial crisis. I think all the bailout money that was used for all these institutions should have been used to pay off consumer debt. That way we can all take part in the scheme those at the top get to enjoy. What do you think?




  1. By Bobby K., January 23, 2019

    The banks shouldn’t receive anymore bailouts. And they should be forced to re-finance the mortgages of all those homeowners who were duped into scam mortgages to so the mortgage reflects the true value of the home (not the over-inflated prices they were at during the bubble the banks created).

  2. By John Dough, January 23, 2019

    The banks already get help from its customers by charging late fees and penalties. The bail out should have gone to home-owners and card-holders directly in the form of a voucher to be used to pay off debts. This is CLEARLY a transfer of wealth, masked as a transfer of debt. The banks transferred their debts to its customers(the tax-payers), who already had debt to begin with. Citizens, unite by paying off your debts on time and remember the bank is holding YOUR money, not the other way around.

  3. By dolrdolrbill, January 23, 2019

    When is main street going to catch a break?
    Your hear of the administration looking into refinancing reform.
    But that’s just it, looking into.
    They need to take action.

  4. By Mark Chen, January 23, 2019

    I wonder how much the directors of Freddie Mac ‘earn’ in compensation. Maybe their job is difficult and they deserve to earn a lot, but, my guess is that they earn enough to have a hard time putting themselves in the shoes of the average taxpayer.


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