For Democrats, Fannie Mae is a showcase of obscene executive salaries and massive corporate welfare that fails in its duty to spread homeownership as widely as possible among Americans of little means.
For Republicans, Fannie represents patronage politics, government intrusion into the marketplace and the socialization of American home finance.
Along with sibling Freddie Mac, Fannie Mae also holds near-monopoly control over key aspects of the home mortgage business and is an enormous risk to American taxpayers.
Is there anything about Fannie Mae to admire?
"We're in the American dream business," the company says in its expensive, endless ad campaign. Oh, OK. Never mind.
Chairman and chief executive Franklin D. Raines is a typical Fannie Mae executive, a former government apparatchik who could have been a lobbyist but fell instead into a tub of butter once known by its full name, the Federal National Mortgage Association.
Raines collected $3.5 million in salary and bonus in 2000 and another $10 million or so from stock options, according to published reports, although Fannie Mae disputes the valuation of the options.
I don't mind when managers make megabucks if they create value, outperform their industry and avoid the larger government feeding troughs. But it's different when fat executive pay is directly subsidized by taxpayers in the form of bargain, government-bolstered loans, as at Fannie Mae.
It's even worse when the company in question is exempt from state or local taxes, and it's downright scary when the executives earn their bonuses through complex financial derivatives and put American taxpayers potentially on the hook for hundreds of billions of dollars.
All true at Fannie Mae. Did I mention Fannie doesn't have to register its stock and bonds with the main U.S. securities watchdog, the Securities and Exchange Commission?
Fannie Mae dropped the Federal National label and adopted its nickname because it likes to pretend it's not backed by the government. This is ridiculous.
Five of Fannie Mae's directors are appointed by the president. The Treasury Department is authorized to invest up to $2.25 billion in Fannie Mae securities, effectively giving the company a highly unusual line of credit with taxpayers.
Although Fannie denies it, Wall Street assumes Washington will bail the company out in case of trouble, which enables Fannie to borrow at rates far below those available to other corporations.
Fannie and Freddie Mac, which like Fannie deals in home mortgages, aren't referred to by the Bush administration as "government-sponsored enterprises" for nothing. Credit agencies rate the firms' debt higher even than that of the bluest-chip private corporations.
In its budget last month, the White House worriedly noted Fannie's and Freddie's reliance on derivatives and riskier loans and fretted that the companies' "combined debt outstanding rose from $518 billion at September 1997 to $1.26 trillion by the end of September 2001."
The Bush people made the usual boilerplate denials of federal guarantees, but why even mention Fannie and Freddie if there's no taxpayer risk? A limited bailout precedent was established in the early 1980s, when Congress changed the tax laws to aid a Fannie that was losing hundreds of millions a year.
Washington created Fannie in the Depression to buy mortgages from banks and thrifts, thus replenishing the lenders' funds to serve additional borrowers. In 1968 Fannie sold stock to the public, settling into the plushest corners of both the government and corporate worlds.
Fannie gets no federal cash directly, but last year the Congressional Budget Office calculated that the tax exemptions, assumed loan guarantees and other gravy added up to a government subsidy for Fannie of $6.1 billion in 2000.
And get this: Fannie transferred less than two-thirds of the subsidy to the mortgage borrowers who are supposed to benefit, CBO estimated. Fannie kept $2.3 billion of the subsidies for its own employees and shareholders, the agency said.
Fannie Mae contends that CBO overestimated the subsidies and says the subsidies that do exist are completely passed on to borrowers in the form of lower mortgage rates.
Perhaps this selfless largess explains why Fannie's profits and stock price have increased 10-fold since the late 1980s.
Pumped up by government steroids, Fannie and Freddie edge aside rivals and dominate the buying and selling of mortgages after the loans have been issued by primary lenders.
"Fannie Mae is to the residential mortgage markets what Microsoft is to computers" - except Microsoft doesn't have federal backing, says the Heritage Foundation's Peter J. Wallison.
Fannie's and Freddie's government charters require the companies to make special efforts on behalf of the poor and minorities. But last month the White House noted that, while the firms attain required targets in loans to the underserved, they actually trail the overall market in such lending.
Most worrisome are Fannie's and Freddie's growing debt, their increased assumption of risk and their opaque dealings in options and other derivatives. Fannie has increased its exposure to dicey, "subprime" loans, which are vulnerable to recession, the White House said. A jump in interest rates could implode the value of Fannie's portfolio if it wasn't properly hedged.
Spokesman Chuck Greener says Fannie's "ability to manage mortgage risk is second to none."
Maybe, but if he's wrong, taxpayers shouldn't be on the hook. The government should end all ties with Fannie and Freddie.
At the end of the day, the Fannie/Freddie subsidies reduce mortgage rates for the typical borrower by a quarter of a percentage point, the Congressional Budget Office figures.
I'd rather pay the difference than be forced as a taxpayer to fluff up returns for Fannie shareholders and risk paying for a big mortgage bailout.