The CBO is announcing today that bailing out the two super-giants of the mortgage industry, Fannie Mae and Freddie Mac, will cost $25bn dollars. Given the pencant for under-bidding such things, we can probably expect this number to double before the year’s out. So, more like $50 billion dollars to bail out these companies.
In the grand scheme of things, $50 billion isn’t really a lot of money, when compared to the impact that a failing mortgage industry would have. It’s especially not very big in comparison to the spiralling cost of the Iraq War. And to the extent that these two organizations are only semi-private enterprises, having been formed by – and from time to time, buttressed – by the federal government, it’s not the biggest handout we’ve seen or are likely to see in the coming years.
But what could that $50 billion dollars have done for American home owners struggling with this crunch? How many people’s homes could have been saved with that money? Had the government acted sooner, instead of chiding the “speculators,” handing this money over to Fannie and Freddie wouldn’t have even been necessary.
But of course, it’s not about the mortgages, it’s about the mortgage industry.
