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Cost of treasury bailout of FNMA and Freddie MXC
Raymond Richman, 1/9/2010

The Treasury Department announced on December 24, 2009 that it removed the $400 billion financial cap on the money it will provide to keep Fannie Mae and Freddie Mac afloat. According to the Associated Press, taxpayers have shelled out $111 billion to the pair, and a senior Treasury official said losses are not expected to exceed the government's estimate this summer of $170 billion over 10 years. Nevertheless, it appears that the Treasury did not believe its own forecast that $400 billion would be enough. The date chosen to remove the financial cap -- Christmas Eve -- was no accident. Not only was it buried by the passage the same day of the Senate's health care biil but it obviated  the need for Congressional approval. "Treasury officials said they decided to lift the caps to eliminate any uncertainty among investors about the government's commitments. But the timing of the announcement on a traditionally slow news day raised eyebrows." The two Government Sponsored Enterprises (GSEs) constitute the secondary for mortgages. The financial commitment provides a limitless supply of money to the two government run entities for four to five more years. 


Housing Predictor forecasts that this bail-out will cost trillions and take a number of years to unwind the real estate crisis as more homeowners lose homes to foreclosure. The surge of foreclosures in the New Year is forecast to top previous records. The Treasury and the Fed are on a mortgage buying binge of securities, and the Federal Reserve Board of New York made an emergency loan to the companies.




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    Wikipedia:

  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]