Posted on 06/14/2010 12:53:21 PM PDT by Qbert
Post-receivership, the GSEs have become a government sanctioned back door bailout of regular banks. Any mortgage that cannot be refi’d or modified ends up on their books. This includes mortgages on the verge of default and foreclosure.
How much is the worst case scenario for the ongoing bailout of the banking sector, plus Fannie’s and Freddie’s own screw ups?
If everything goes precisely wrong, taxpayers are potentially on the hook for another $1 trillion bailout:
The cost of fixing Fannie Mae and Freddie Mac, the mortgage companies that last year bought or guaranteed three-quarters of all U.S. home loans, will be at least $160 billion and could grow to as much as $1 trillion after the biggest bailout in American history.
Fannie and Freddie, now 80 percent owned by U.S. taxpayers, already have drawn $145 billion from an unlimited line of government credit granted to ensure that home buyers can get loans while the private housing-finance industry is moribund. That surpasses the amount spent on rescues of American International Group Inc., General Motors Co. or Citigroup Inc., which have begun repaying their debts.
Its not a coincidence that many of these banks are finding the capital to pay back their bailout loans. The Obama administration is continuing one of the more horrific policies of the Bush administration: Using the GSEs as a back door bailout for the rest of the banking sector:
[Snip]
Hence, Fannie and Freddie have become a dumping ground for all manner of bad bank loans.
The GSEs have had their own problems over the years — accounting fraud, recklessly chasing market share, lowering loan quality, etc. — but they have now become are now the last stop for every crappy mortgage ever written:
(Excerpt) Read more at ritholtz.com ...
ping
The message is: Walk away from your mortgages folks. The banks don’t care, because it is all guaranteed by the Gov’t anyway. The Gov’t doesn’t care either, because its, well, the Gov’t, and the money is all printed by the Fed anyway.
More of privatize profit and socialize loses.
Should The Government Stop Dumping Money Into A Giant Hole?
http://www.youtube.com/watch?v=JnX-D4kkPOQ
“I love the money fire...”
And these same incompetents will soon be running our health care.
Turgidson: "Mr. President, I'm not saying we wouldn't get our hair mussed. But I do say... no more than ten to twenty million killed, tops. Uh... depended on the breaks".
Just substitute $160 billion to $1 trillion for the ten to twenty million from the movie line and there you go.............
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.