‘Backdoor bailout’ of Fannie, Freddie could cost $259 billion: report

[JBeukema]

The cost to taxpayers of bailing out mortgage companies Fannie Mae and Freddie Mac could more than double over the next three years, making it the most expensive of all the recent bailouts.
That comes as no surprise to some critics of the bailouts, who have been arguing that federal assistance to the two mortgage companies is a way of hiding the true cost of the massive TARP bailout to Wall Street banks.
They say that, because Fannie and Freddie have been buying bad mortgages from the banks, the true cost of the bank bailouts is being shifted through a "backdoor bailout" of the mortgage companies.
A report (PDF) from the Federal Housing Finance Agency says the Fannie and Freddie bailout -- which began when the federal government took control of the two companies in September, 2008 -- has already cost taxpayers $135 billion. If the country were to fall into another recession in the coming months, the companies could require another $215 billion in cash.


Under that scenario, the total given to the two companies would be $363 billion. But because Fannie and Freddie are paying dividends back to the government, the total cost to taxpayers would be $259 billion.

‘Backdoor bailout’ of Fannie, Freddie could cost $259 billion: report | Raw Story

 

[william the wie]

I hate to come across as doom and gloom but there is no way that we the people are going to get off that easy.

 

[waltky]

Granny says, "Good - now dey can used it to pay off the deficit...

Bank bailout turns a profit
March 30, 2011 -- Don't look now, but the bank bailout is starting to turn a profit. The Treasury Department will announce Wednesday that the money it gave to banks during the financial crisis has been paid back, and then some.

The bank bailout -- part of the Troubled Asset Relief Program -- is now $6 billion in the black, according to a Treasury Department official, who said the ultimate profit might rise to $20 billion. And that's nice. But if you look at the whole program, there are still some trouble spots, and not everyone is happy. For a long time, TARP was the albatross around Treasury's neck. It authorized the department to spend up to $700 billion to stabilize financial markets through the purchase of "troubled assets."

And that's just what Treasury did, spending a total of $432 billion dollars to help banks, the domestic auto industry, AIG (AIG, Fortune 500), and fund grants aimed at avoiding foreclosures. And while some of the biggest banks are now flourishing, critics are slamming Treasury for falling down on part of its broader mission -- helping Main Street. "These Main Street-oriented goals were not, as the Treasury Department is now suggesting, mere window dressing that needed only to be taken 'into account,' " Neil Barofsky, the program's former special inspector general, wrote in a New York Times op-ed.

Barofsky specifically laments the attention paid to the big banks, while mortgage modifications were all but ignored. A program -- the Home Affordable Modification Program -- was put in place in February 2009, but has not been particularly successful. "That program has been a colossal failure," Barofsky wrote. "As the program flounders, foreclosures continue to mount, with 8 million to 13 million filings forecast over the program's lifetime." On Tuesday, the Republican-controlled House voted to kill the program. And Treasury acknowledges the housing market is still difficult.

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