We’re still paying for the federal government’s attempt at social engineering through manipulation of the housing markets. The federal government created the subprime mortgage market by using regulation and incentive to push/lure lenders into making loans to people who really had no business getting them.
That house of cards collapsed in 2008, and we’re still paying for it even now:
WASHINGTON (AP) — Fannie Mae asked the government Friday for an additional $8.5 billion in aid after declining home prices caused more defaults on loans guaranteed by the mortgage giant.
The company said it lost $8.7 billion in the first three months of the year. Those losses led Fannie to request more than three times the federal aid it sought in the previous quarter. The total cost of rescuing the government-controlled mortgage buyer is nearing $100 billion – the most expensive bailout of a single company.
Combined with the bailout of sibling company Freddie Mac, the government expects their rescue to cost taxpayers about $259 billion. That money will cover the mortgage giants’ losses on soured loans made in the midst of the housing bubble.
What’s scary is that our political leaders still haven’t learned their lesson. Even know the federal government continues to encourage subprime loans, and even make them directly through (strangely enough) organizations such as the Department of Agriculture.