The federal takeover of the Fannie Mae and Freddie Mac – some call it the “nationalization” of the mortgage industry – is finally happening. Congrats to you, John and Suzy Taxpayer! You did it!
Oh yeah, it couldn’t have happened without your tax dollars. The takeover comes at a cost of $200 billion (with a b) to taxpayers.
On the plus side, the government insists that the takeover will bring some much needed solvency – and hopefully stability – to the housing market. This should mean more available mortage credit which should translate into slower home market slides (it’s clearly not going to single handedly turn around the real estate industry).
How will it happen? The takeover converts existing Fannie Mae and Freddie Mac debt into government debt. Just like that – magic!
This additional $200 billion debt was not considered when estimates of the federal deficit were released earlier today. The Congressional Budget Office reported that the budget deficit will jump by $246 billion to $407 billion (actually a little bit less than predicted). Last year, the budget deficit was $161 billion.
More government debt. *sigh* Kids, I’m sorry.
Last Updated on