Fannie Mae Rumor

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A little birdy at Fannie Mae told me the other day of some anger issues there. Apparently, when the federal government finished the audit of both companies’ financials, Fannie Mae was showing to be adequately capitalized while it was Freddie Mac that seemed to be in the deepest debt.

Some at Fannie feel it was Freddie’s financials that forced the feds to put them both into receivership. So there’s some resentment at Fannie Mae that their current predicament is wholly due to Freddie Mac’s mistakes.

Knowing these two companies as I do, I’ll say that, for many years, Freddie Mac employees resented Fannie Mae for dragging them into the hot seat on a regular basis via the words and actions of charismatic former Fannie Mae CEO, Franklin Raines. Freddie employees felt that much of the negative publicity aimed at the GSEs in general and Fannie and Freddie in particular had to do with Raines’ aggressive behavior.

It appears that Fannie employees finally understand what Freddie employees have been feeling for lo these many years. If the rumor is true, that is.

What is know for sure, however, is that these two companies have always had a real competitive antipathy towards each other. Unfortunately for them, most outsider view them as part of the same system (which they are) and, therefore, view the actions of one as synonymous with the actions of the other (which they are not).

Pat O’Hearn