Fannie Mae and Freddie Mac, the two government-backed housing corporations bailed out seven years ago by federal taxpayers, may be headed for trouble again.
Despite post-financial crisis pressure to reform, neither Fannie nor Freddie has done much to mitigate the risk to the American taxpayer inherent in government backing for these institutions.
In fact, it appears that their equity (capital) cushion is dwindling even as portfolio obligations guaranteed by the federal taxpayer have increased in size totaling nearly $5 trillion.
Adding insult to injury, Fannie and Freddie continue to advance the same types of “affordable housing” programs that fueled the last housing crisis. They’ve also added a new Housing Trust Fund aimed at so-called “underserved” geographic regions.
