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The additional funds could raise the cost of taking over the mortgage finance giants to $171.1 billion for taxpayers. The budget report also discusses the potential fate of Fannie Mae and Freddie Mac, including a possible return to their previous status, but adds that the White House plans to work with Congress, regulators and the mortgage industry on a long-term role for the companies.
The Washington Post Reports
Fannie Mae and Freddie Mac have already received or requested $78.8 billion in aid as losses have mounted. The government seized the firms in September out of concern that their failure could destabilize the global financial system.
District-based Fannie Mae posted a $23 billion loss last week, prompting a $19 billion government investment. McLean-based Freddie Mac is expected to report its earnings this week.
When it took over the firms, the government pledged $100 billion for each company to keep them solvent. Since then, the government has increased its commitment to $200 billion each.
Some analysts have said that the companies might need more than $100 billion apiece if the housing and economic downturns persist. Fannie Mae's latest earnings report reflected a troubling trend that losses were spreading from risky borrowers to safer ones.
Posted May 12th, 2009 by Armen Hareyan
