Fannie Mae-No Politics (FNMA)

[big-yank]

You keep bringing up the same stuff up on deferred tax assets and healthy income decrying the impetus for any bailout in the first place. Why don't you just go back and read the infamous Barron's article from March 10, 2008 that set the momentum in place for a public declaration of insolvency.

As for timelines, the facts I present are indisputable.

http://online.wsj.com/public/resources/documents/fannietimeline0506.pdf

Now, point by point.

1. Yes there is core net interest income in every year that Fannie has been in business. But there is also core net interest expense in satisfying MBS guarantees in each year, too. You can't just consider the intake and ignore the outflow.

2. "The value of risky loans and securities was swamping their reported capital. By the end of 2007, guaranteed and portfolio mortgages with FICO scores less than 600 exceeded reported capital at Fannie Mae by more than seven to one; Alt-A loans and securities, by more than six to one. Loans for which borrowers did not provide full documentation amounted to more than ten times reported capital." (source: FCIC)

3. Insurance only covers select mortgage assets, and many of the providers were TARP recipients on shaky ground, themselves. But the magnitude of risk exposure remained HUGE, even considering any eventual payments. "At the end of December 2007, Fannie reported that it had $44 billion of capital to absorb potential losses on $879 billion of assets and $2.2 trillion of guarantees on mortgage-backed securities; if losses exceeded 1.45%, it would be insolvent.Freddie would be insolvent if losses exceeded 1.7%. Moreover, there were serious questions about the validity of their 'reported' capital." (source: FCIC)

4. There was no such surplus. You overlooked MBS interest expense.

5. Unworthy of comment. I frankly expect better from you. That comment is said with a mix of respect and disappointment.