Posted on 10/21/2010 3:29:01 PM PDT by Lorianne
The ultimate cost of rescuing Freddie Mac and Fannie Mae may double, their government regulator has said.
The US government has already given the two federal mortgage agencies $148bn (£94bn) in capital injections.
But because of continuing loan losses, that figure may increase to between $221bn-$363bn, according to the Federal Housing Finance Agency (FHFA).
Meanwhile, the FHFA has appointed a law firm to look at suing big US banks for mis-selling home loans to the agencies.
The regulator has hired the California-based litigation specialists Quinn Emanuel Urquhart & Sullivan, according to a report in the Wall Street Journal.
Ballooning costs
During the 2008 financial crisis, Washington put Freddie Mac and Fannie Mae into "conservatorship" - a quasi-nationalised status in which the federal government promised to maintain their solvency by injecting new equity on demand.
Originally, the two home loan agencies' total needs were estimated to be $200bn - of which three-quarters has already been provided - but the FHFA has now revised that figure upwards.
The regulator's upper estimate of $363bn would only happen if there is a second downturn in the US housing market - something that many economists believe has already begun since the expiry in April of a tax credit for homebuyers.
(Excerpt) Read more at bbc.co.uk ...
Who exactly are the “pseudo-government” entities Freddie and Fannie?
BTTT
Thank you.
Uh, the Fed is us.
“We” shouldn't be bailing out anyone.
Most people have forgotten that in 2008, the first federal action was just to supply short term liquidity to prevent an imminent collapse of the banking system. THAT was a good thing and proper role of a government. Basically a national defense type of action.
But soon after; that liquidity injection morphed into the bail out everyone monstrosity that we had.
Which is why tarp was NOT A GOOD THING as was stated over and over by certain people at the time.
The fallout from TARP will collapse us.
The dictatorship of Bankster Inc continues fleecing America, to enrich themselves.
Homeowners do not employ lobbyists in Washington, don't make large campaign contributions.
Representatives in Congress that voted against the stimulus promptly submitted request for stimulus funding for their districts once the stimulus bill passed.
How's that for unwavering conviction?
That was part and parcel with the moral hazard.
They were being pressured by thei constituents “hey, the bank and corps got gazillions, why can’t we have some crumb?”
Moral hazard x infinity.
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