I hate to say I told you so, but what the heck. We did. The Business & Media Institute warned that Fannie Mae was a looming taxpayer-backed disaster - in 2005. Only the network news shows didn't like to tell you about it. An op-ed I wrote appeared in The New York Post under the headline: "The $30B Scandal That TV Forgot." I think $30 billion is small potatoes now. $100 billion is the number being used now.
Fannie Mae and Freddie Mac are Government-Sponsored Entities, which means they are publicly listed yet still backed by taxpayers. They have also been mismanaged and embroiled in accounting fiascos. Fannie was run by prominent Democrats like former Chief Executive Officer Franklin Raines and former Vice Chairman Jamie Gorelick - both instrumental figures in the Clinton administration.
A Dec. 23, 2004, Washington Post article explained that Franklin Raines "was a director of the Office of Management and Budget in the Clinton administration, and his name was mentioned as a possible Treasury Secretary had Sen. John F. Kerry (D-Mass.) been elected president."
Newsweek's Charles Gasparino labeled this GSE a "Government-Sponsored Enron" and said the lack of TV news coverage of the issue was "politically correct" because journalists supported what the organization did.
According to today's New York Times online: "Shares of District-based Fannie Mae dropped 45 percent in the first minutes of trading today, to around $7.50 a share, while shares of McLean-based Freddie Mac collapsed nearly 50 percent, to about $4.20." When BMI first reported the issue, Fannie Mae was trading at $55 a share. It's lost $47.50 or 86 percent of its value in that time.
CNBC's Jim Cramer was on "Squawk Box" this morning calling for $100 billion to be given by the government (that's us) to Fannie and Freddie to keep them afloat.
Better grab your wallets.
