Grab your wallet! Federal regulators warn that Fannie Mae and Freddie Mac, the quasi-government (not Wall Street) mortgage entities are going to cost lots more taxpayer dollars to fix. Zachary A. Goldfarb of the WaPo reports:
Fannie and Freddie, the federally-controlled mortgage finance giants, will likely need at least another $73 billion and perhaps as much $215 billion from taxpayers in the next three years to meet their financial obligations, the Federal Housing Finance Agency said.
The growing taxpayer infusions will cover losses Fannie and Freddie suffer on home loans, as well as payments the companies must make to the U.S. Treasury in exchange for a federal guarantee to provide cash to keep the companies solvent.
In fact, over time, the majority of funds flowing to Fannie and Freddie from taxpayers will go to pay that dividend.
To date, the Treasury has already injected $148 billion into Fannie and Freddie. Under the worst-case scenario, in which the country enters a second recession, the total infusion would equal $363 billion in three years.
Richard Baehr notes: This will not help Barney Frank in his tight race with Sean Bielat. Frank was a staunch defender of Fannie and Freddie (his boyfriend-at-the-time -- the one after the gay escort ring head, and before the harasser of Bielat -- was an executive at Fannie). There is a real chance for Bielat to beat the veteran Frank. Scott Brown carried Frank's district, and there seems to be a similar level of enthusiasm for Bielat on the ground, according to locals.Hat tip: Ed Lasky