The Mother Of All Bailouts: And All The King's Men
As of June 30th:
Fannie and Freddie said their regulatory capital was $47 billion and $37.1 billion, respectively.
So why would the Treasury have to fork up to $200 billion to bail them out?
Excluded from its calculations of regulatory capital...
Freddie has accumulated $34.3 billion of paper losses on mortgage related securities. Fannie has only $11.2 billion of these "temporary" losses.
The above mentioned items inflate what are called deferred tax assets, the bigger the losses are, the larger the tax assets become.
Freddie has deferred tax assets of $18.4 billion. Fannie. has $20.6 billion.
Simply put, Fannie actually has $15 billion on hand to back all its loans and debt, while Freddie is $22 billion in the hole.
Add yesterday's estimate of $360 billion in GSE refi REO's over the next two years; and $200 billion is nowhere near enough.
And all the King's men could not put Humpty Dumpty back together again.
Fannie and Freddie said their regulatory capital was $47 billion and $37.1 billion, respectively.
So why would the Treasury have to fork up to $200 billion to bail them out?
Excluded from its calculations of regulatory capital...
Freddie has accumulated $34.3 billion of paper losses on mortgage related securities. Fannie has only $11.2 billion of these "temporary" losses.
The above mentioned items inflate what are called deferred tax assets, the bigger the losses are, the larger the tax assets become.
Freddie has deferred tax assets of $18.4 billion. Fannie. has $20.6 billion.
Simply put, Fannie actually has $15 billion on hand to back all its loans and debt, while Freddie is $22 billion in the hole.
Add yesterday's estimate of $360 billion in GSE refi REO's over the next two years; and $200 billion is nowhere near enough.
And all the King's men could not put Humpty Dumpty back together again.
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