The banking system is too broken to keep feeding money into a failed investment. The banks will only continue to suck money from the tax payers in order to cover their insane practices. We are being forced to pay for the mistaken practices of the government and the Fed along with all their minion banks. Another bubble will burst!!
By THE ASSOCIATED PRESS
WASHINGTON (AP) — The government-controlled mortgage giant Freddie Mac has requested $6 billion in additional aid after posting a wider loss in the third quarter.
Freddie Mac said Thursday that it lost $6 billion, or $1.86 a share, in the July-September quarter. That compares with a loss of $4.1 billion, or $1.25 a share, in the same quarter of 2010.
Freddie’s losses are increasing mainly for two reasons: Many homeowners are paying less interest because they are able to refinance at lower mortgage rates. And failing and bankrupt mortgage insurers are not paying out as much money when homeowners default.
The government rescued Freddie Mac and its sister company, Fannie Mae, in September 2008 after extensive losses on risky mortgages threatened to topple them. Since then, a federal regulator has controlled their financial decisions.
Taxpayers have spent about $169 billion to rescue Fannie and Freddie.
Freddie and Fannie own or guarantee about half of all American mortgages, or nearly 31 million home loans worth more than $5 trillion. Along with other federal agencies, they backed nearly 90 percent of new mortgages over the past year.
The amount that Freddie has set aside for losses increased from $2 billion in the January-March quarter to $3.6 billion in the July-September quarter.
Fannie and Freddie buy home loans from banks and other lenders, package them into bonds with a guarantee against default, and then sell them to investorsaround the world. When property values drop, homeowners default. Because of the guarantees, Fannie and Freddie must pay for the losses.
Fannie and Freddie are required to pay 10 percent dividends on the government money they receive. Freddie paid $1.6 billion in dividends to the Treasury Department in the July-September quarter.