After having created the twin monsters known as Fannie Mae and Freddie Mac, and having given them a blank check from the US taxpayers, the losers in Washington are trying to figure out how much it will cost to bail them out.
The Bush administration's plan to rescue ailing mortgage-finance giants Fannie Mae and Freddie Mac is likely to cost about $25 billion during the next two years, according to congressional budget analysts.
In a letter to lawmakers released this morning, the Congressional Budget Office said there is "a significant chance -- probably better than 50 percent -- that the proposed new Treasury authority" to lend Fannie Mae and Freddie Mac money or buy their stock would not need to be used before the authority expired at the end of 2009.
However, "that scenario is far from the only possible result," the letter says, and the cost estimate takes into account "the probability of various possible outcomes." That means rescuing the mortgage firms could cost significantly more than $25 billion if the authority is exercised, the letter says.
Isn't this great? Franklin Raines and Jamie Gorelick get to keep their millions that they made at Fannie Mae. The federal government will bail out the two quasi-private companies and allow them to continue dominating the mortgage industry with their backing from the taxpayers. The people who foolishly bought more house than they can afford get bailed out.
And what about those of us who have diligently made our monthly mortgage payments? We did not buy more house than we could afford. And what of those people who live in areas where housing prices went sky-high but knew better than to pay $600,000 for a little 3-2 tract house? They toughed it out in tiny apartments rather than take out a mortgage with unaffordable payments. We will have to pay the bill, while Goldman Sachs clowns like Henry Paulson and Keynesian economists like Ben Bernanke made stupid decisions.
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