The Conservative Cave
Current Events => Economics => Topic started by: thundley4 on November 10, 2009, 08:47:01 AM
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Fannie Mae said Monday it may have to ask the government for more financial assistance because the company cannot sell $5.2 billion in tax credits.
The Treasury Department last week blocked the mortgage giant from selling about $2.6 billion in low-income housing tax credits to investors that included Goldman Sachs Group Inc. Because the investors could use the credits to reduce their own tax bills, Treasury said the sale would result in a loss of tax revenue greater than the savings to the government.
"We have said all along that we would make determinations based on what is in the taxpayers' interests," said Andrew Williams, a Treasury spokesman.
Fannie Mae requested $15 billion in financial aid last week after reporting a $19.8 billion quarterly loss, bringing the taxpayers' bill for the mortgage company's rescue to $60 billion.
Fannie said in a regulatory filing that it was evaluating whether it would have to take a charge in the current quarter to reflect the value of the now-worthless tax credits. If so, Fannie Mae's net worth would be reduced by that amount, and it would need more money to shore up its balance sheet.
CNSN (http://www.cnsnews.com/news/article/56891)
Let me get this straight. Treasury blocked the sale of tax credits, because it would have meant a loss of revenue to the Treasury. So in effect those tax credits are now worthless, and Fannie is needing more money from the government, which the sale of those credits could have lessened?
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Amazingly circular reasoning, isn't it? That's why I hate accountants.
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What the circle was, was a slow spiral down the drain of US financial market credibility. Might as well stop the stupid even if it is too late, so the damage gets no worse.
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my head hurts....
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Vote Chris Dodd and Barney Frank out of office, and the pain will go away