Ticking Prime Bomb: Fannie Mae Monthly Summary, October 2009

Decades from now, the summer of 2008 will likely be remembered to mark the turning point where legislative blundering took an otherwise serious financial crisis and molested it into an epic financial collapse.

By fully assuming the liabilities of Fannie Mae (FNM) and Freddie Mac (FRE), the two colossal and corrupt (and conduit of corruptness funneling junk Countrywide Financial loans onto the implied balance sheet of the federal government) government-sponsored enterprises, the federal government, led by Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke, has thrust taxpayers into an abyss of insolvency with one mighty shove.

Given the sheer size of these government-sponsored companies, with loan guarantee obligations recently estimated by Federal Reserve Bank of St. Louis President William Poole of totaling $4.47 Trillion (That’s trillion with a capital T… for perspective all U.S. government debt held by the public totals roughly $4.87 Trillion) this legislative reversal making certain the “implied” government guarantee is reckless to say the least.

The following chart (click for larger ultra-dynamic and surf-able chart) shows what Fannie Mae terms the count of “Seriously Delinquent” loans as a percentage of all loans on their books.

It’s important to understand that Fannie Mae does NOT segregate foreclosures from delinquent loans when reporting these numbers

Finally, the following chart (click for larger ultra-dynamic and surf-able chart) shows the relative movements of Fannie Mae’s credit and non-credit enhanced (insured and non-insured) “Seriously Delinquent” loans.

Comments

[Davewmart]

FNM and FRE are the only respect I can think of where the US may be even worse than the UK.
Even that is debateable though, as the Governement have guaranteed the banks, which collectively have balance sheets around 3 or 4 times the size of the UK GNP, and amongst the assets counted there are most of the UK mortgages, so effectively that may amount to much the same thing as the situation in the US.

2009 Nov 28 05:57 PM

[the gerald]

post a similar chart for C and BAC, not that they will let you see it. i see a 4.5% or so seriously delinquent. is bac not cooking at 12-20%? why you think they so corrupt? because the wsj says so? go get a corruption report on c and bac.

2009 Nov 29 08:28 AM

[gilnail]

We, the taxpayers, are on the hook for all this and it makes many people very angry just like the Savings and Loan crisis did.... but wait.. in the long run the government MADE MONEY OFF THE S&L CRISIS. I suggest people just hang on for the ride because our government just made the investment of the century by buying in to the banks when the people were afraid to and by purchasing property at deeply discounted rates when short-sighted people were just throwing their hands in the air wanting to be rescued. If the banks, because of the government's investments, can sit on some of this porperty for a while, they (and we the taxpayers) can make very subsatantial profits. If you have not gotten in the market yet, what are you waiting for? Higher prices on stocks? If you think this is a bad time to invest, you really need to pick up a history book.

2009 Nov 30 07:14 AM

[LALI]

well all the money FNM is getting are for us citizens needing money for houses. Nothing wrong with that

2009 Dec 01 01:48 AM