Fannie Mae and Freddie Mac are unlikely to repay the $85 billion in government assistance they received as part of the bailout program, the agencies' top regulator said Thursday.
"Their book is so large," James Lockhart, director of the Federal Housing Finance Agency, told the National Press Club. "It's hard for me to see that they will be able to repay all of that."
While other banks have been banging down Geithner’s door to repay the TARP money because of the onorous restrictions incumbent upon playing with TARP money… Fannie and Freddie are cool, thanks.
How cool? So cool, they will most likely require more tax payer assistance – that’s how cool.
Yet another example of how there is no profit motive for these government sponsored entities. Hell, there doesn’t appear to be much of a loss motive either.
When the government offered to bail out the agencies, some argued that the transactions - which paid 10 percent interest -- could be profitable for taxpayers. Lockhart's remarks, however, cast serious doubt on whether the agencies will be able to repay the initial capital investment at all.
Where anybody is getting 10% these days is anybody’s guess.
"Unfortunately, I guess we have to look at it as an investment by the taxpayer to stabilize the mortgage market," Lockhart later told Bloomberg Television.
Out: Bailout. In: Investment, the return on which will arrive, if at all, when you are six feet under.
P.S. Still no word on whether Franklin Raines and Jamie Gorelick will be paying back their bonuses.
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