When Congress authorized a taxpayer bailout of government-backed mortgage giants Fannie Mae and Freddie Mac, supporters claimed that the mere authorization of a bailout would restore investor confidence in the mortgage giants and eliminate the need for taxpayers to spend even a penny actually bailing them out. Now it turns out that many billions of dollars in recurring infusions of money from taxpayers will likely be required to keep the mortgage giants afloat, according to today’s Washington Post. “Instead of giving each company a big capital infusion up front, the government could make quarterly injections as the companies’ losses warrant, the sources said. This would be an attempt to minimize the initial cost of the rescue.”
We earlier criticized the mortgage bailout law on many, many, many grounds, and discussed how federal obsessions with “affordable housing” and “diversity” helped push the mortgage giants towards insolvency.