Fannie & Freddie: The biggest bailout

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By MATTHEW RICHARDSON

Fannie Mae and Freddie Mac recently announced fresh losses, bringing their total since the fall of 2008 to $126 billion.

It barely registered as news -- although taxpayers are completely on the line for the bad debt of these government-sponsored enterprises.

There's a chance that the support thrown at the rest of the financial sector -- $465 billion of direct capital, $285 billion of loan guarantees and insurance of $418 billion of assets -- isn't all money down the drain. $175 billion has been returned, the loan guarantees look much safer, and the insurance program, mainly for Citigroup, has been terminated.

Even the poster child for financial excess, AIG, may be able to fully pay off the government if the housing market doesn't deteriorate further or the economy substantially improves.

But the chances are slim to none that Fannie or Freddie will be able to pay back the funds. It is highly likely that taxpayers will lose well over $200 billion -- and it may well pass $300 billion. When the history of the crisis is all written, these two institutions will turn out to be the most costly of the financial sector -- worse than AIG, Citigroup or Bank of America/Merrill Lynch.

So where is the outrage?

Fannie & Freddie: The biggest bailout

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