Cost of Fannie, Freddie bailouts could double
Rescuing Fannie, Freddie could cost taxpayers as much as $259 billion, regulator says
The government spelled out Thursday just how much the most expensive rescue of the financial crisis will end up costing taxpayers — as much as $259 billion for mortgage buyers Fannie Mae and Freddie Mac.
That figure would be nearly twice the amount Fannie and Freddie have received so far.
By contrast, the combined bailouts of financial companies and the auto industry have cost taxpayers roughly $50 billion, according to the Treasury Department’s latest projections. And the bailouts of Wall Street banks alone, which sparked public fury, have so far brought taxpayers a $16 billion return.
Fannie and Freddie could end up costing taxpayers between $142 billion and $259 billion through 2013, the Federal Housing Finance Agency projected Thursday. Those figures take into account dividends that the agency estimates the two companies will end up paying the government: Between $80 billion and $104 billion over the next three years.
The two mortgage finance companies have been operating under federal control for more than two years after nearly collapsing because of the housing bust.
When the government stepped in to take them over in September 2008, their rescue was expected to cost only a combined $200 billion. Fannie and Freddie have already received $148 billion from the government. But they have paid back $13 billion in dividends so far. The terms of their rescue require them to pay a 10 percent annual dividend to the Treasury Department.
Thursday’s estimate was the first time the housing agency has released a public estimate of the taxpayer tab. The combined bailout of the two mortgage companies is on track to be the largest of the financial crisis.
Compare that with what was once the most expensive single bailout — American International Group Inc. That is now projected to cost taxpayers only $5 billion. Even that bailout could turn a profit, Treasury said this month, if its sale of AIG shares succeeds.
The Obama administration’s rescue of the U.S. auto industry is projected to cost $17 billion, Treasury has said.
AP Business Writers Christopher S. Rugaber and Daniel Wagner contributed to this report.