Hooked Like a Drug Addict

Remember back when Bill Clinton and the GOP Congress did a massive welfare reform effort which included limitations on the public dole how absolutely outraged some people and groups were. There were people who spent most of their lives on the dole and when it was coming to an end, everyone got their knickers in a twist. So if ending welfare as we knew it was going to be hard for people, imagine how much harder it will be to ween corporations of the public teat. Fannie Mae (remember them) are seeking $16 billion from the Treasury to prop up their company.

Fannie Mae, the largest source of home-loan money in the U.S., said it will need to tap as much as $16 billion in emergency funds from the U.S. Treasury Department to stay afloat as deterioration in the housing market persists.

Fannie’s planned request, announced today, follows Freddie Mac, which said Jan. 23 that it will need as much as $35 billion more in federal aid. Unprecedented mortgage losses drove the net worth of both companies below zero last quarter, they said in separate securities filings.

This will be Washington-based Fannie’s first draw on a $200 billion emergency fund set up by Treasury in September to keep the government-sponsored enterprises solvent. Fannie said losses on mortgage loans and a decline in the market value of its assets accounted for the shortfall in the fourth quarter.

This is the first draw, the second draw will come within the next two months.

Really, why are these companies still in business? Oh yeah, Barney Frank and House Democrats think they do a good job, all evidence to the contrary.