Posted on 06/13/2011 7:42:59 PM PDT by Kaslin
Subprime Scandal: Turns out the true cost of bailing out Fannie Mae and Freddie Mac is double what the White House claims. Yet reforming the failed mortgage giants remains in limbo.
In a new report delivered to the House Budget Committee, the Congressional Budget Office puts the bailout figure at $317 billion — not the $130 billion claimed by the Obama administration, which has vowed to "reform" Fannie and Freddie.
And CBO says costs to taxpayers will continue to rise as the housing market weakens.
Why low-ball the bleeding from these quasi-governmental agencies? Because the White House doesn't really want to reform them — just like Hill Democrats, who studiously avoided touching Fannie and Freddie in their 2,300-page financial-reform bill.
They want to keep them around to subsidize "affordable housing," off the official budget.
Better to pretend they're not as big a drain on the Treasury as they really are — and that they're not the failed social experiments they clearly are.
Check out page 11 of the White House's recent proposal to Congress for "reforming" the toxic twins. It insists Fannie and Freddie's role in financing affordable-housing is "vital." And that "any changes should occur at a measured pace that preserves widespread access to affordable mortgages for lower-income Americans."
In other words, housing is a "right," so let's keep sticking it to taxpayers.
(Excerpt) Read more at investors.com ...
If they’re too big to fail, can they be broken up into regional agencies?
Nothing will stir the American people to "real" action, NOTHING! And this along with a million other things should.
What’s particularly scary is all of the discussion about massive cuts in the defense budget, well in excess of a mere $300 Billion, while we continue to flush money down a massive Federal black hole.
If you want to save money on Fannie and Freddie, then abolish Fannie and Freddie and let the cards fall where they may. Both of these quasi-agencies have been about little more than wealth redistribution and in many States, Reparations via mortgage fraud.
Time to cut our losses.
I'm reading "Reckless Endangerment" by Gretchen Morgenson.
She names names. I would say it's a must read.
There is no need to break them up and remake them because there is no need for these Great Depression era FDR-created GSE services to begin with - they only distorted the normal housing/mortgage market and have been privatizing profits while socializing the risk / liabilities / losses.
Fannie and Freddie aren't Too Big To Fail (TBTF) - they are Too Big To Succeed (TBTS). So is the rest of the Big Government (e.g., look at Greece and the PIIGS of EU).
though, I’m no economist, but what happens if Fannie and Freddie DO collapse and fall? Does that bring down the US economy? Anyone have a clear picture that they can tell me?
They can't collapse and fail anymore, they already have - as "private" entities - as a result they were seized and taken over by the U.S. government due to "implicit" guarantees they were operating since inception.
They are now responsible for about 97% of newsly issued mortgages... Ideally they will be wound down over time, without new programs replacing them, though Barney Frank and other Dems are trying to "reinvent" them or replace them with something similar, different in name only.
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