Pete the Banker: Red Ink Gushing from Fannie and Freddie

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By Pete the Banker
The CBO in a report issued late last year estimated that the cost of the bailout of Fannie Mae and Freddie Mac would approach $390 Billion over the next decade.  But the Administration has had expansive plans for the former GSE’s engulfing them in the extremely expensive Homeowner Affordable Modification Mortgage Program (HAMP) and pushing new CRA/Subprime like clone lending programs through Fannie, Freddie and the FHA, now accounting for 90% of the residential mortgage market. 
From Investors Business Daily Cartoonist

 

Not surprisingly the worst case basis for the GSE’s bailout, something the Administration isn’t publicizing, is climbing and may approach $1 Trillion according to housing industry analysts (see Business Week story about it here). Yet despite the effusive eruption of red ink from the now effectively Federal Government owned entities, Congressional Reform is still months and perhaps years away.
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