Freddie Mac, the government-sponsored mortgage enterprise that played a huge role in the housing-bubble and subsequent collapse, is now asking for more taxpayer funding to shore up its fiscal black hole. Despite being essentially taken over by federal regulators back in 2008, it continues to bleed cash and has requested $6 billion to cover recent losses. That is on top of other assistance it and its sibling Fannie Mae have received over the past few years. It is also just a small down payment on likely future bailouts:
Taxpayers have spent about $169 billion to rescue Fannie and Freddie, the most expensive bailout of the 2008 financial crisis. The government estimates it could cost up to $51 billion more to support the companies through 2014 after subtracting dividend payments.
The organizations and their huge portfolios represent a gargantuan risk to taxpayers. Unfortunately, reform efforts stalled after a series of proposals and hearings last spring. The Senate and the Administration should stop dithering, cap Fannie’s and Freddie’s ability to make new loans or take on new risky mortgages, and begin the process of winding down these government-sponsored enterprises that have distorted the housing market.