Market Overview

Postal Service, Food Stamps, and Fannie Mae: The End of The Common Family?


With a constitutional business potentially in default, food stamps on the rise, and a government controlled mortgage company posting losses, could the image of the common family be in jeopardy? Rather an end to the common family, here is why the common family is only redistributing itself.

Prepayment or Else

The United States Postal Service has lost the technology battle for the past four years and ended the 2010 fiscal year with a net loss of $8.5 billion, according to Reuters. The issue at hand is not the third quarter losses of $3.1 billion, but how USPS, or by association, Congress, is going to pay for the retiree health benefit prepayment.

"Without changes in the law, the Postal Service will be unable to make the $5.5 billion mandated prepayment due in September," Joseph Corbett, the agency's chief financial officer, said in a statement.

But just because they are in too deep doesn't mean it should be at the taxpayers expense. Total mail volume is down 2.6 percent from last year at 39.8 billion as consumers intertwine their lives with social media, online productions, and a paper free green lifestyle.

USPS wants to cut Saturday delivery, raise rates, and merge failing branches with private retailers. USPS employs 671,687 workers, which has most likely decreased since April 2011. If USPS seeks out help from Congress, audits and restrictions will be placed on the failing company on the brink of extinction. Harsh as it may seem, the large workforce and the idea of the career long mail carrier could become a thing of the past as the new decade focuses on the conveniences and costs of email and online media.

Fannie Mae to Pay

Fannie Mae (OTC: FNMA.OB) needs $2.8 billion after paying a $2.3 billion dividend to the U.S. Treasury to reduce a $5.1 billion loss.

Fannie Mae, based in Washington, D.C., and sibling Freddie Mac, based in McLean, Va., were created by Congress to buy mortgages from lenders and package them into bonds that are resold to global investors. They own or guarantee about half of all mortgages in the U.S., or nearly 31 million home loans worth more than $5 trillion. Along with other federal agencies, they backed nearly 90 percent of new mortgages over the past year, according to Yahoo Finance.

Revenue climbed 16 percent to $5.24 billion from $4.5 billion. Net interest income, or money earned from deposits and loans, increased 18 percent to $4.97 billion from $4.21 billion.

As a result of the low levels of consumer confidence and high unemployment, Fannie Mae is striving to ensure homeowners pay off their mortgages and decrease the number of foreclosures. After the housing market spike along with high mortgage rates in late 2006, homeowners could be paying more on a mortgage than the house is actually worth on the market.

"We remain the largest source of liquidity for the U.S. mortgage market, and we are committed to creating long-term value by helping to build a stable, sustainable housing market for the future," President and CEO Michael J. Williams said in a statement.

A strong commitment to Fannie Mae could improve potential homeowners willingness to seek financing for a new home, but there could be a different story once the market rebounds. Homeowners may turn to renting instead of seeking for loans, which could prove beneficial if there is low job security and the threat of decreasing home values.

Up 12 Percent From 2010, 34 Percent From 2009

The Supplemental Nutrition Assistance Program (SNAP) or food stamps now aids 15 percent of the U.S. population, according to the United States Department of Agriculture.

The program provides monthly benefits to low-income individuals and families, which they can use at stores that accept SNAP benefits. To qualify for food stamps, an individual's income can't exceed $1,174 a month or $14,088 a year -- an amount that is 130% of the national poverty level, according to CNN Money . The average food stamp benefit was $133.80 per person and $283.65 per household in May.

The large increase stems from Alabama, where almost a million people received disaster assistance after the terrible storms in late April and early May. Other than the spike, California, Florida, New York, and Texas received the most food stamps in May with more than three million.

With expected increases in unemployment and food prices, there should be even higher demand for food stamps in the next couple of months.


The United States Postal Service is almost unable to pay for retiree benefits, a record 45.8 million Americans now use food stamps, and Fannie Mae needs $2.8 billion in taxpayer's dollars.

With the American family coming into question, will the future of government aid be focused towards the average citizen? From big business and Wall Street banks to USPS and food stamps, will tax dollars shift towards redistributing opportunities for the lower income brackets?


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