Fannie And Freddie Are Headed For Another BailoutDave Kranzler Now the Inspector Generals Federal Housing Finance Agency has issued a warning that both FNM/FRE are headed for another bailout, which is no surprise to me: Future profitability is far from assured, Federal Housing Finance Agency Office of Inspector General said in a report, pointing out that the firms could again chalk up losses on their derivatives portfolios, similar to those they reported in the fourth quarter. This increases the likelihood of additional Treasury investment, the report stated. Reuters (LINK) Similar to when Fannie was plugged full of derivatives under former CEO Franklin Raines who by the way had no clue how catastrophic the situation was and should be in jail but instead received a $100 million youre fired severance agreement the Government has once again looked the other way while Wall Street unloaded another avalanche of derivatives onto FNM/FRE. Once again the Taxpayers will pay for this. This is not a warning this is a get ready here it comes statement. The fact is that most of FNM/FREs profitability has been driven by the same fraudulent mark to model accounting that has generated most the big bank profits since 2009. And the Government used this fraudulent accounting to suck money out of FNM/FRE. The improved balance sheet has enabled both FNM/FRE to issue debt to investors. The money raised has been used reload their mortgage holdings and for dividend payback payments to the Treasury. FNMs CEO warned of the possibility of another bailout in February, after announcing FNMs smallest dividend payment to the Treasury in more than four years. This is not a warning its an inevitability. The housing market is set to re-collapse, which will blow-up both Fannie and Freddie once again. You can read more from Dave Kranzler at his site Investment Research Dynamics, where this article first appeared. 