The Last Bear

Fannie Mae has gotten used to tap taxpayers for a few billion U.S. Dollars, this time for a tiny $2.5 billion. Every quarter they have asked for money and it is too late for the government not to give them any. Fannie Mae reported a $3.46 billion third-quarter loss, which included $2.1 billion in dividend payments to the Treasury. Now they ask for $2.5 Billion so they can pay dividends during the fourth quarter.

Does anyone else see the pattern which emerged?


1. You borrow a large amount of money, big enough for the source to keep lending in order to keep their hope of recovery alive.

2. You promise big dividend payments in order to disguise the deal as more attractive.

3. You borrow additional money, preferably from a different source although not necessary, in order to pay for those dividends.

4. Repeat step three as often as desired. The illusion of payback is complete.

Freddie Mac reported a third quarter loss of $4.1 billion and asked for $100 million in aid. Fannie and Freddie work in tandem, and since patience with bailouts has been stretched they probably flipped a coin in order to determine who gets the big money and who gets a drop in the bucket.

Photo Credit: The picture in the top left corner was created by Paul and downloaded for free use at freedigitalphotos.net.