November 20, 2007 (LPAC)--It had been the (misplaced) hope of Congressional leaders, such as Barney Frank (D-MA) and Charles Schumer (D-NY), that home lending giants Fannie Mae and Freddie Mac could absorb the losses stemming from the expanding real estate collapse, and that that would be the end of the story. Instead, the financial crash has proven to be "end of their delusion."

A new chapter was added to that story Tuesday, when Freddie Mac reported a net loss of $2 billion for the third quarter, almost three times its loss of $715 million during the same period a year earlier; this report came two weeks after large losses, and asset shrinkage, reported by Fannie Mae in the third quarter. Freddie Mac also announced an $8.1 billion, or 25% drop, in the fair value of its assets, and it said it had set aside $1.2 billion to cover future credit losses.

In their statement, Freddie also said they have hired Wall Street firms Goldman Sachs and Lehman Brothers to help them "consider very near term capital-raising alternatives," otherwise indicating that they were strapped for cash, which is further bad news for Congress.

Tuesday's report shows that the problems appear to be spreading. Freddie said that 0.51% of its single-family (prime) home loans were 90 days or more delinquent in September, up from 0.42% in June. When interviewed by Bloomberg News, Freddie's Chief Financial Officer Anthony Piszel further declared that, "There is nothing we see right now to be more optimistic for fourth-quarter performance."

Congress must now acknowledge what only LaRouche has so far told them: that this is much more than just a "housing" crisis, --this includes the banks, too.  In fact, the whole system needs reorganizing!  The Home Owners and Bank Protection Act is the first step in that direction.