FINANCE: You Made More in 2010 Than Fannie Since 1970

House Financial Services Committee Chairman Barney Frank, who begins drafting legislation next month to overhaul Fannie Mae and Freddie Mac, said in 2003 the mortgage companies were “financially sound.” How wrong was he?

The CHART OF THE DAY shows Fannie Mae’s cumulative profit since going public in 1970. In 2008 alone, the company lost $58 billion, erasing its cumulative profit as a publicly traded company. In 2009, it lost $72 billion more.

Frank’s challenge will be to create an entity that serves the goal of making housing more affordable without the conflict of interest of being driven by shareholder returns.

Republicans may highlight Frank’s past support for the government-sponsored agencies. The Massachusetts Democrat said seven years ago of Fannie Mae and Freddie Mac: “We see entities that are fundamentally sound financially and withstand some of the disaster scenarios. . .” and ‘‘I want to roll the dice a little more in this situation towards subsidized housing.’’

The government-backed mortgage giants were placed in conservatorship in September 2008 and are now 80 percent owned by U.S. taxpayers. They own or guarantee more than half of the nation’s $11 trillion in residential mortgages. Fannie Mae and Freddie Mac have an unlimited line of credit from the government and have so far cost U.S. taxpayers $145 billion, more than American International Group Inc.


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