Bloomberg reports on the biggest scam:
When the history is written on the collapse of Fannie Mae and Freddie Mac, it will go down in the annals of corporate scandals as one of the greatest accounting scams committed in broad daylight.
All anyone had to do to know the government-guaranteed mortgage financiers were insolvent was read their financial statements. You didn't need a trained professional eye to discern this open secret, only a skeptical one.
Just last month, Fannie and Freddie said their regulatory capital was $47 billion and $37.1 billion, respectively, as of June 30. The Treasury Department now says it may have to inject as much as $200 billion of capital into the two companies. Nothing much changed at the companies in that span. They just couldn't get the government to keep up the ruse any longer.
To have believed those capital figures, you first needed to accept two key assertions by the companies. The first was that the mortgage-market meltdown was a temporary blip. The second was that Fannie and Freddie both would be wildly profitable for decades to come, once the blip was over.
You'll want to read the whole article.As the
Wall Street Journal has said:
"What's the difference between Enron and Fannie Mae? Answer: The guys at Enron have been convicted."
A question to ponder.
