Are you guys ready for an angry rant that I practiced at a bar last night? Yes? Okay here we go!
With all the shit that our wonderful nation's most Fabulous bankers are being given lately, I figuerd today would be a good idea to call our government out on some of their own shit (which honestly, is a lot more fun than it should be).
Today's shit talk will center around the two "gorillas in the room," Freddie Mac and Fannie Mae. Really, gorillas in the room is a bit of an understatement. Picture the room being the back of a minivan and the gorillas as a pair of King Kongs. Now imagine that they are repeatedly bashing your skull in with some sort of primitive tools made out of rocks the size of entire football stadiums. You get what I'm trying to say... Fannie and Freddie are HUGE problems that nobody has even dared trying to take on because (1) it would be a huge fucking disaster to even try to come up with a plan to plan something to fix them, and (2) it would require so much hypocrisy on the part of the Obama administration that as soon as our fearless leader announced his bold plan, he would just spontaneously combust, or be stoned to death by an angry mob of winged angels that flew down from the heavens as the clouds parted. Or something else really ridiculous...
We've all heard the story...the American tax payer will not be held hostage by banks who take risk using FDIC insured money ("taxpayer money".. i say this in quotations because I've already explained in a previous post that FDIC money is NOT taxpayer money, but we'll just go with it for now... longest parentheses ever!), pocket the gains, and ask for bailouts to cover the losses. Fine. Well hold on there... let's analyze exactly what Freddie and Fannie have been doing:
When times were good, they made a FUCKTON of money. If you took the cumulative compensation of the guys that ran these two companies and converted them to dollar bills, you would LITERALLY need several trucks to move it. That's how much money we're talking about here (okay maybe not literally... I have no idea just how much volume the cash would take up.. but you get the point).
They took on more and more and more and MOAR risk because even though they were not government backed entities explicitly, there was a common belief among investors (which turned out to be true) that the US government would never allow Fannie and Freddie to default and would bail them out if anything happened. The government also went out of its way to make it clear that although they did not directly guarantee the debts of Fannie and Freddie, they pretty much did anyway. The purpose of FNM and FRE was to make mortgages more affordable and increase the homeownership rate - because their cause was a "noble" one, they benefited both directly and indirectly from government (taxpayer money), which in the end they used to enrich themselves... as they were "private companies." Let me repeat: PRIVATE companies with a government guarantee on their debt. How could this possibly go wrong? Let's continue.
What happened when shit hit the fan? Well, Fannie and Freddie lost a lot of money.... too bad "lost a lot of money" doesn't even begin to describe the ginormous amounts we're talking about here. In fact they lost so much money that they needed to be... rolls eyes... BAILED OUT by the US government. Who'da thunk it?
But unlike "the banks" that were bailed out... banks that received a fixed amount of money with terms and interest that they had to pay on it.... and that ultimately have or are going to pay it back.. Fannie and Freddie simply go to the government every fucking quarter, and ask for more money. They're just being handed money. Just HANDED money. Like, are you even serious???
This is how it goes. "This quarter we lost $1 billion. US government, please give us $2 billion." Then next quarter "This quarter, we lost $4 billion. US government, please give us $8 billion." Then the next quarter... This past quarter, the total amount of money that Fannie and Freddie have received almost reached $140 billion. THAT'S 140 BILLION DOLLARS. Stalin once said that when a couple of people die, it's s tragedy, but when millions die, it's a statistic. Well are we so fucking numb to losing money that $140 billion can just sneak past us like that? To put it in perspective, these two companies got bailed out as much as the entire COUNTRY OF GREECE.
So to put it shortly... Fannie Mae and Freddie Mac took 100% of the profits from the excessive risk taking during the housing boom while operating as "private companies" and as soon as shit went sour, they were bailed out by the government and taxpayers had to foot the seemingly endless bill.... Hmm...they made billions of dollars in profits by gambling with taxpayer money and now need to be bailed out... hmmm.. where have I heard that one before....
Even MOAR ridiculous is the fact that last Christmas eve, the Obama administration repealed a law that capped government aid to Fannie and Freddie at $400 billion and promised to cover UNLIMITED losses through 2012. They're basically saying, "don't even try to pay us back, we got this one..." and sliding the money under the table on fucking Christmas eve so nobody would notice.
Now I'm not saying that it's wrong to try and put out a fire by throwing combustible money at it... or that it's wrong to take taxpayer dollars and literally throw them into a black hole. What I am saying, is that next time I hear Obama say anything, and I mean anything about anyone taking risk with taxpayer money before addressing the humongous fucking disaster that the government sponsored agencies were, I'm going to stick out both middle fingers at him, say the words "Fannie Mae and Freddie Mac," and then slap him across the face. And then perhaps he will spontaneously combust, which would be fucking epic.
Mo out.
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