Fannie and Freddie Waste Taxpayer Money - WSJ.com

Fannie and Freddie Waste Taxpayer Money - WSJ.com: "'I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing.'

—Representative Barney Frank, September 25, 2003

It was six years ago that Mr. Frank announced his famous dice roll on Fannie Mae and Freddie Mac in the name of affordable housing. Mr. Frank got his wish, and the losses keep rolling in, with no end in sight as Washington finds new ways for the companies to serve political purposes.

Last week, Fannie Mae posted a quarterly loss of $19.8 billion—which believe it or not was an improvement on the $29.4 billion that it lost a year earlier. Last quarter's results came with yet another request for government aid—$15 billion worth. That brings the total tab for Fannie and Freddie to $111 billion since they were put into conservatorship in September 2008.

It would be bad enough if Fannie and Freddie's continuing losses were merely the product of bad bets made amid the housing bubble in 2006 and 2007. But the latest red ink is in large part the result of a deliberate choice to run their businesses at a loss over the past year to support White House housing policies.

The most recent losses include $22 billion of what Fannie Mae calls 'credit-related expenses,' which in English means foreclosure costs and losses on loans that are 'worth' more than the house. Of that amount, $7.7 billion comes straight from Fannie's support of the Obama Administration's mortgage-modification program. Fannie and Freddie have been buying mortgages out of the securities they were bundled into and are then modifying the terms, which invariably means taking a loss on the loan."