Freddie Mac has posted an eye-popping $8 billion first-quarter loss — an amount higher than the $7.8 billion that Freddie lost in Q4 2009.
The GSE will be seeking more funding from the government. In the short run it will likely get it. The Obama Administration has all but said the sky’s the limit for keeping Fannie and Freddie solvent. There is a case to be made for that – certainly multifamily companies like that position.
However the numbers also bolster a case being made by some Republicans that it is time to cut the cord for Fannie and Freddie. Unfortunately, they may be the right — the government’s support of the two GSEs in the long run is not sustainable. It is also hindering private market solutions, such as a multifamily CMBS.
Given the strong constituency that wants to keep the status quo with the GSEs – at least, again for multifamily – the situation is not likely to change any time soon. Including the GSE’s bleeding red ink.
Erika,
I am surprised at your choice of words “unfortunately they [Republicans] might be right.” Unfortunately? As a tax payer, you should be shouting from the rooftops that somebody in Congress is finally doing something about one of the most poorly run, money losing goverment operations of all times. Given what F&F has done over the past several years, Amtrak, the DMV and the Post Office look like reasonable operations. At formation and with a more limited scope, F&F served a purpose and function well in the market. However, like all goverment entities that do not have to compete or turn a profit, it has failed spectacularly. F&F is now a disaster. Another $8 billion? Sickening.
Jeff Hawkins
San Diego