Fannie Mae's New Mandate: Lose As Much As Possible

Fannie Mae is one of the few companies in the history of the world where it is being mandated by Congress to lose as much money as possible, but that is precisely what Obama's plan is. From the WSJ:

Keep in mind that losing money is now Mr. Williams's job. Fannie and its sibling Freddie Mac became wards of the Treasury in 2008, after years of denying that they posed any financial risk to taxpayers. But rather than wind them down, or at least limit their losses, the Obama Administration has ordered them to modify hundreds of thousands of mortgages in an attempt to avoid foreclosures.

The companies are doing this with gusto, adding to the losses they have on the subprime and "liar loans" they piled up during the housing bubble they did so much to create. According to Fannie's 10K filing with the SEC, the company lost $26.4 billion in 2009 from participating in the Obama Administration's Home Affordable Modification Program.

Taxpayers will still pay for this in the end, but Treasury would rather have the losses laundered through Fan and Fred than have Congress vote for new bailout money. So last Christmas Eve, Treasury announced that it was lifting the $400 billion loss cap on the two companies, creating a potentially unlimited liability. And late Friday, Fannie announced that it has asked Treasury for $15.3 billion more to cover its anticipated losses. For those keeping score, that's $76.2 billion so far in taxpayer commitments to Fannie, with much more to go.

...Oh, and we almost forgot: Last week, Secretary Timothy Geithner told Congress that Treasury will wait until next year to propose a plan to reform the companies so this catastrophe doesn't happen again. Never mind that Treasury says it's essential to re-regulate the rest of the financial services industry right now, without delay.