Mar
More Government Gambling with Taxpayers’ Money
The Federal Housing Finance Board gave approval on Monday for the nation’s 12 Federal Home Loan Banks to increase their purchase of mortgage-backed bonds by about $150 billion. While some terms this a step by the government to infuse money back into markets that crumbled from the housing crisis, The F Word calls this a shameless case of corporate welfare.
The purchases will be restricted to bonds guaranteed by housing finance giants Fannie Mae and Freddie Mac. Just last week, Fannie Mae and Freddie Mac were given the green light to add $200 billion of mortgage securities to their portfolios.
The latest move increases the limit on the banks’ investments to six times capital for two years, up from three times.
The taxpayer could get skewered if banks mismanage their latest infusion of cash. Says Paul Miller, a bank analyst at Friedman Billings Ramsey & Co. in Arlington, Virginia:
“The Federal Home Loan Banks have been notoriously bad managers of interest-rate risk.”
Read the Full Article in the Los Angeles Times Business Section.
