Fannie, Freddie Bailout Could Cost Taxpayers $25 Billion

New York Times:

WASHINGTON -- The proposed government rescue of the nation's two mortgage finance giants will appear on the federal budget as a $25 billion cost to taxpayers, the independent Congressional Budget Office said on Tuesday even though officials conceded that there was no way of really knowing what, if anything, a bailout would cost.

The budget office said there was a better than even chance that the rescue package would not be needed before the end of 2009 and would not cost taxpayers any money. But the office also estimated a 5 percent chance that the mortgage companies, Fannie Mae and Freddie Mac, could lose $100 billion, which would cost taxpayers far more than $25 billion.

Read the full story here

-OR-

Read about Secretary Paulson trying to sell the rescue to the general public

Read the whole story: New York Times

Comments

[yappnmutt]

its a good thing the dollar isn't worth anything otherwise we may be talking about some real money. 25 billion. lol . only a week's worth of borrowing from the chinese. chump change for the american taxpayer.

how's that dry run feel on your sphincter muscle? enjoy it because there will be a lot more than 25 billion of them.

[GeoLee]

You gotta hand it to the republicans. They are all for socialism when it comes to bailing out corrupt business practicioners and all fo rindividualism and libertarianism when it comes to reaping the benefits.

[thegreatgiginthesky]

I don't ever want to hear these right wing b-a-s tards talk about socialism.

[manicallday]

HuffPost's Pick

I worked my ass off in law school for the last three years so what do I get? This really upsets me because while in law school I closed loans and I can attest that everyone has blood on their hands. If it wasn't for rims, motorcycles, jet skis, boats and big-screen t.v.s I don't think that I would have closed half the loans that I did. I worked hard and tried to do the responsible thing and now I have to bail these people out? I don't care if it is the borrowers or the lenders - they all need to sleep in the beds that they made. If they really want to help don't bail out the stupid - how about a moratorium on student loans?

Further, there are plenty of smaller community banks that can do a better job with lending. I have personally seen it. But by bailing the these larger banks out only stifles the growth of smaller institutions, which may help prevent future unrestricted credit grabs. In fact, I have become so impressed by some of the smaller community banks that I hope to start my own institution in the future that will help people live a dream within their means. However, with the government handing out welfare to large irresponsible corporation, I don't think that I will ever get the chance.

[allovertheplace]

I'm not sure you understand what Freddie and Fannie do. They provide liquidity to the banks with which you are so enamored. There have been many people including Greenspan and Bernanke who for some time have wanted greater oversight of the GSE's (in determining what loans they could buy) but while real estate was booming there were few sympathetic ears. The local banks that fail will mostly be a result of construction loans I think. Reminiscent of 90-91 when 900 some banks failed. To put it in perspective I think only 8 have failed so far in this wave.

[samej82]

*sigh*... 25 Billion can help those in crisis get out of the crisis, and keep their homes and return their lives... This will ultimately help the creditor like Freddie/Fannie, who if anything should be fined for unethical business practices.
I don't want my tax dollars to be used in this way. Is there a way people or a PAC can fight this decision?

[Poboy]

If you do it, you better do it quickly.

That train has left the station.

[javaman]

That same train not only has left the station, it was switched to the wrong track and is now a mess after hitting a brick wall.

[wedgie]

This makes me feel used. What with already having to pay of Hillary's debt...

**

[GeoLee]

Like you have been one of those who sent the 100,000 whle those of us sent our first checks to Obama at an average of $818.18 dikkars per person. Doubt it!

[doug108]

HuffPost's Pick

Deregulation. I have to get my car inspected once a year, because the proper functioning of my automobile directly affects the lives of other people. If these damned banks have that much of an affect on the rest of the economy, on the rest of us, why shouldn't they be regulated to the hilt? If the quality of my life is dependent on some rich-ass banker's decisions, then his decisions should be under a microscope every day, all day.

[Shaddup]

Screw that. Eat the rich.

[LeonBNJ]

Too bad we can't get a lot of that money from all those that made millions from flipping houses, building new and renovating with cheap illegal help and from the up front fees and commissions on selling lousy mortages.

[Trueheart]

Exactly right Leon.
I like the odds that we'll pick up the bill for the bailout: "better than even chance" or "5 percent chance." This is reassuring, is it not? I don't even know what that means in reality. Oh wait, we've abandoned reality in this country....I forgot to remember.

[sammy333]

".. and that government ... by the super-rich people, for the super-rich people, shall not perish from the earth" (the poor shalt pay tax, though).

By the way, this bailout 5 times the amount of money we spend on finding cure for cancer (kills > 200,000 people /year). The NCI budget is around 5-6B.

What a pathetic bunch of greedy appointees. Remove the disgusting Republican loopholes (started from the Enron looting of California) that led to all the bubbles that are killing this country. Stop feeding the speculators with more public money you collect from the poor.

[darthdarcy]

This is a real problem that the pages won't turn so you can reply to your comments or others..

It never did this before..I did totally shut down the computer once and then the pages worked but after going into sleep mode the next day again no page turning...

The thing is I use other sites and this does not occur, such as Musicians Friend I can go through tons of pages and Rondo Music so I think there is something wrong with the Java script for this site and that's new..maybe Huffington post needs to get some new techs or some work on her servers...

[Poboy]

I have that problem too.

[kallopolis]

ditto.

[ErnestineBass]

I believe Hp's servers have been...ummm...corrupted.

Make of that what you will.

[ErnestineBass]

Is it just me, or is anyone else starting to lose their patience with this $10 billion here, and $25 billion there...oh, and that $200 million we told you the "War" in Iraq would cost, it's gonna be more like $3 TRILLION.

WHEN DOES IT STOP? How long can we continue to BLEED money like this?

I really want to know because my bank account is nearing exhaustion.

[GeoLee]

While they pay 15% on their stock earnings and bi tch that it is too much. The fact is they are leaving this country so poor that if a Dem gets elected he will have to raise taxes on all of us , thus two years from now they can oust the dems from Congress. Those who don't know history are doomed to repeat it. There are days, ErnestineBass, that I almost want to vote for McCain just to say "You broke it, You fix it!" Really, when you look at what they are doing, we are not doing BHO any favors for him by electing him. MY CFP is telling me those in the know think it will take about 10 years turnaround. I feel sorry for BHO and what he will be inheriting on Day 1. Not sorry enough to vote Republican, though, but my audacity of hope meter is on zero these days.

[Bettysdad]

Stop being a "whiner."

It;'s all in your head.

[javaman]

Thank you Mr. Gramm, I now feel so much better.

[Egalitare]

$25 b is just the beginning. If housing prices continue to fall for the next 18-24 months, that will seem like chump change.

[Proud2BIndy]

Hoorah for Republican fiscal policy!!!

[ErnestineBass]

Let us count the number of oxymorons in that statement...

[GeoLee]

You are on tonight..lol!

[anastasiabeaverhousen]

FNMA and FHLMC are government chartered institutions. They are too big to fail.

Having said that, the GOVERNMENT should be the FIRST ONE paid back when things turn around. But that won't happen.

The same greedy bas tards that drove the financial bus into the red ink ditch will be there with open palms to receive yet another year's grossly inflated paycheck and stock options.

You gotta love the free market, eh? Taxpayers be damned. Gotta save the corporations......

In the immortal words of Michael Moore, "Dude, I want my country back"...

[imusintheevening]

For repuglicanistas the objective is to privatize profits and socialize risk and bailouts.

[anastasiabeaverhousen]

Why isn't that a felony, at best and treasonous, realistically????

[nova07]

The government shouldn't be bailing out corporations or individuals, since all three share the blame for the mortgage/real estate crisis we're currently facing.

Corporations operated within the limits of the law and pursued high risk/high return financial instruments and like in past times of financial turmoil fell victim to a statistically "infrequent" market event. You win some, you lose some.

If you speculate in real estate there exists the possibility that your holding can decrease in value and you might have to realize some type of loss. Obviously, more heavily if you are speculating excessively and carelessly. If you signed a mortgage that you didn't understand to buy a house you couldn't afford, tough luck. Next time you should live within your means.

Both corporations and these individuals should be left hung out to dry and next time maybe they'll learn. Both republicans and democrats in the government allowed the real estate/mortgage industry to function as it did, and either didn't care and was unable to see the real underlying risks. Most people in this country still can and do make their mortgage payments on time, and since FNMA and FHLMC are that large, they are more important to our overall economic system. Unfair? absolutely. I doubt it's going to change any time soon.

[GeoLee]

I heard a very smart guy on PTV ysterday say we should set up the repayment so that the stock holders do not get first profits, but the government does. I understand about 30-40 years ago there was a similar bailout of a company in which that was the set up and it worked. There should be no way a stock holder's profits come before the people funding the bailout are repaid for bailing out the company or agency. Of couse I am sure the deal to do otherwise will be sealed before january 1009.

[NoMercy]

Some conspiracy theorists believe it goes back that far.

[Bettysdad]

Who says they're too big to fail?

Let's find out.

[holeybuybull]

I'm waiting for those three words that seem to make any legislation palatable to the masses: "For the children".

[openhand]

Big deal, thats less than 1% of the cost the tax payer has to cough up for the war in Iraq, the 1st war fought by the U.S. where the government has not raised taxes to pay for it. Happy New Year.