spiffy new cbo estimate on the cost to us taxpayers for fnma and fmcc betw 2011-2020: a cool $97 billion more....
Posted by
xi (aka dmuck)
Sep 17 '10, 04:00
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"Bearing the risk that soaring mortgage defaults will again kneecap Fannie Mae and Freddie Mac could cost taxpayers $97 billion over the next decade.
The Congressional Budget Office said in a report Thursday that propping up Fannie (FNMA) and Freddie (FMCC), the government-sponsored mortgage investors, is expected to cost taxpayers $53 billion between 2011 and 2020.
That number is not new. The CBO said last month in issuing its annual summer budget update that declining home losses at Fannie and Freddie and reduced costs in the making home affordable plan had actually reduced the official estimate of the cost of federally supporting the GSEs, from the $64 billion the CBO had projected in January.
What is new is the CBO's decision to show how much propping up Fannie and Freddie could cost the taxpayer over the next decade, using three different accounting methods.
The cost indicated by the CBO's preferred method -- which takes into account all the risks taxpayers are shouldering in supporting the companies, including uncertainty over future economic conditions -- is $97 billion above the tab implied by the rosiest analysis.
The costliest projection is appropriate, the CBO said, because it alone fully "recognizes that there is a cost to taxpayers when the government assumes financial risk."
The CBO made the estimate in a report issued Thursday in response to a request by U.S. Rep. Barney Frank, the Massachusetts Democrat who runs the House Financial Services committee. Democrats in Washington have been holding hearings over what to do about Fannie and Freddie, the government-supported mortgage investors that have consumed more than $150 billion of taxpayer funds since their federal takeover two years ago."
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