Washington Post column urges end to bailout of Fannie and Freddie
It's been four years since the most destructive phase of the financial crisis, but now it is time to end the most costly bailout of all, the government takeover of Fannie Mae and Freddie Mac.
Keeping these firms above water has been very pricey, costing the Treasury $187 billion, but the GSE only gained back $46 billion, now totaling $141 billion in losses.
Nonetheless, this support has allowed the two companies to continue to service the $4.5 trillion in guarantees against mortgage default and the $900 million in debt they incurred.
Jim Millstein and Phillip Swagel write in The Washington Post that the time is now to end the bailout in such a way to protect the housing market. As you have seen in the news recently, home prices are stabilizing and are rising in many areas, where Fannie and Freddie are becoming profitable again.
However, since the takeover of Fannie and Freddie, the government now backstops 90% of all new mortgages and has no future plan to protect taxpayers against future losses on mortgage credit or to reduce its market share.
Millstein and Swagel go into detail on how to prevent this from happening on The Washington Post.