Fannie/Freddie Bailout May Reach $1 Trillion

Just when Americans thought that the bailouts were over, Bloomberg Financial News service reported on June 13 that the final tab for Fannie Mae and Freddie Mac bailout is increasing and may total as much as $1 trillion.

“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,” Bloomberg explained.

The news comes as criticism over the exposure of Fannie and Freddie's holding 75 percent of the home mortgage market at the time the housing bubble popped in 2008 is crystalizing. But last month the Wall Street Journal reported that while Fannie and Freddie's exposure to the home market has decreased in that past two years, total federal government exposure to home mortgages has continued to explode. “Government-related entities backed 96.5% of all home loans during the first quarter, up from 90% in 2009, according to Inside Mortgage Finance,” the Journal summarized. Inside Mortgage Finance notes that while the market share of Fannie and Freddie has declined slightly from the 75 percent high, other Government Sponsored Enterprises (GSE) and federal agencies have more than picked up the slack.

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