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Friday, November 05, 2010

Cost of Fannie Mae and Freddie Mac Bailouts

Cost of Fannie, Freddie bailout might hit $685B.
Initially projected two years ago to cost taxpayers $200B, the bailout of Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) could reach $685B, according to a new S&P estimate.
Fannie and Freddie have already cost taxpayers nearly $134 billion, but S&P analysts said Thursday that the government could ultimately be forced to inject $280 billion into the firms because of a slowdown in the housing market.
Creating the companies to take the place of the two fallen mortgage giants will likely cost taxpayers another $400B in capital. S&P analysts wrote that addressing the firms' problems "is likely to be an expensive repair job for U.S. taxpayers."
Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 187% (a double plus another 87%!!) vs. the S&P500 UP only 21% vs. NASDAQ  UP a only 18%   (All through 11/4/10) 
In 2009, "Kirk's Newsletter Explore Portfolio" gained 33.5% vs. the DJIA up 18.8%
2010 YTD the "Explore Portfolio" is up 10.5% YTD
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Full WSJ Story:  Fannie, Freddie Overhaul Could Cost $685 Billion


  1. I think the mistake was in allowing Larry Summers et al to guarantee Fannie Mae and Freddie Mac's debt as if it were government-backed. They should have been allowed to default and go into structured bankruptcy if necessary, and get the worst behind us.

  2. Tentative Outright Treasury Operation Schedule

    The Federal Reserve announced its tentative Permanent Open Market Operations schedule, consisting of around $105B in government bond purchases over the next month. The purchases will be made with $75B from the Fed's $600B QE2 plan, and another $30B in rollovers from maturing agency debt and agency MBS from QE1. The purchases, which will begin with $6B-8B this Friday, are roughly in-line with expectations.


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