Fannie Mae and Freddie Mac may drain $1,000,000,000,000

Fannie Mae and Freddie Mac, which were pressured by Rep. Barney Frank, Sen. Chris Dodd and other Congress members to make $1 trillion in recklessly risky home loans, may cost taxpayers that full $1 trillion.

That’s 1 million million dollars. It's not a new estimate, but it's the first time CNBC is talking seriously about it. Apparently, more struggling low-income homebuyers are discovering they really weren't ready to take on those loans.

CNBC reports:

For American taxpayers, now on the hook for some $145 billion in housing losses connected to Fannie Mae and Freddie Mac loans, that amount could be just the tip of the iceberg.

According to the Congressional Budget Office, the losses could balloon to $400 billion. And if housing prices fall further, some experts caution, the cost to the taxpayer could hit as much as $1 trillion.

Ridiculously irresponsible. From about 1993 to 2008, Fannie and Freddie established the lowest common denominator for the rules that were supposed to guarantee the safety and soundness of mortgage loans.

With Barney Frank and Chris Dodd demandind increasingly weaker standards for granting home loans, Fannie and Freddie bought and backed half of America’s mortgages, including $1 trillion in ridiculously irresponsible loans that accountants warned were far too unlikely to be paid back.

Those bad home loans then were repackaged, like time bombs, as part of millions of other investments, setting the stage for the financial collapse of 2008.

No real reform. Fannie and Freddie and Barney and Chris destroyed the economy two years ago. So it’s significant the financial “reform” bill currently before Congress would do nothing to prevent those four characters from doing it all over again.

Frank Warner

Comments

[Neo]

Lawmakers are now considering ending the $700 billion TARP program early and using some of that money to help fund the new financial overhaul bill, CNBC has learned.

Accounting tricks ... all that money was borrowed. What else should we expect from Congress ?

[What?]

I appreciate that you do not turn a blind eye to Fannie and Freddie as I have seen many do. Those GSE's were as much on the ground floor of the finacial collapse as anybody on Wall Street. Fannie and Freddie's bread was most certainly buttered in Washington D.C., not Wall Street.