Friday, August 17, 2012

Peter to pay Paul

Tim Geithner who admitted he didn't understand his own tax returns, and used LIBOR as a benchmark interest rate when he knew it was inaccurate, nonetheless, can innovate when he has to;

"With today's announcement, we are taking the next step toward responsibly winding down Fannie Mae and Freddie Mac while continuing to support the necessary process of repair and recovery of the housing market," said Michael Stegman, who serves as Treasury Secretary Timothy Geithner's counselor on housing policy.
The government rescued Fannie and Freddie in September 2008 when massive losses on risky mortgages threatened to topple them. The Treasury has pumped nearly $188 billion into the companies. In return for that support, the government has received senior preferred shares of stock that pay a 10 percent dividend.
Currently, Fannie and Freddie make dividend payments to the Treasury every quarter. That has forced them to borrow money from the government and use that money to repay the government in periods when they didn't turn a large enough profit to cover the dividend payments.
The changes announced Friday are aimed at avoiding the threat that Fannie and Freddie could one day exhaust their Treasury support because they did not generate enough profits to pay back their dividends.
Under the new arrangement, the government will simply take all the profits that the firms make in any quarter as a dividend payment. The government will not require a dividend payment in periods when the firms run a loss.
So far, Fannie and Freddie have paid nearly $46 billion in dividends.
As opposed to the evil Big Banks, who've already repaid their TARP loans in full with interest. 

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