FHA bailout watch

October 8, 2009

From Bloomberg, ht AK:

The Federal Housing Administration, which insures mortgages with low down payments, may require a U.S. bailout because of $54 billion more in losses than it can withstand, a former Fannie Mae executive said.

“It appears destined for a taxpayer bailout in the next 24 to 36 months,” consultant Edward Pinto said in testimony prepared for a House committee hearing in Washington today. Pinto was the chief credit officer from 1987 to 1989 for Fannie Mae, the mortgage-finance company that is now government-run.

Adding to the cost of the government’s price floor under housing.

One comment

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No wonder the price of gold goes up everyday. Who wants to hold Dollars anymore? Have you seen the price of oil?

How mad is it to create a sub-prime housing crises with easy money, low down payments, government subsidized mortgage guarantees, AND THEN try to fix the problem with low-down payments, government price subsidies (homebuyer tax credit), awkwardly low interest rates (quantitative easing), and government mortgage guarantees? Sowing the seeds of our own destruction…

Posted by John Thomson | Report as abusive