Thursday, January 14, 2010

How Much Will Fannie/Freddie Lose?

They will lose a LOT of money.

I asked Kyle Bass, one of today’s witnesses on panel #2, to compare the F/F failures with other institutional failures. His answer began with something like, “I don’t know where to begin. There’s just so much.” Bass predicted taxpayer losses from these two firms could exceed $300 billion. Even if it’s “only” $100+ B of lost taxpayer money, that’s an obscene amount.

Bonus and large retirement benefits continue to be paid. Not to worry.

HT: Hennessey

UPDATE: Could be a lot worse than that, by the way...

Freddie will likely lose around $178 billion of its $1.86 trillion credit guarantee book, and Fannie will likely lose $270 billion of its $2.81 trillion book. Combine the credit guarantee books of the two firms, and you reach a $4.67 trillion book, with estimated losses at just under ~10%, or $448 billion. --HT Barry

By and large, the Fan/Fred disaster can be attributed to Barney Frank and Bill Clinton. GWB did not like what he saw over there, but was stymied by Congress. Yes, there were (R) co-operators in this screwing of the taxpayers....

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