$1 Trillion for Fannie and Freddie?
That is the worst-case scenario, according to Egan-Jones Ratings Co., quoted in a Bloomberg article making the rounds. The agency says that if home prices
Jul 31, 202041.2K Shares3.7M Views
That is the worst-case scenario, accordingto Egan-Jones Ratings Co., quoted in a Bloomberg article making the rounds. The agency says that if home prices decline 20 percent from their current level — they are now off around 25 percent from their summer 2006 peak — losses will ultimately add up to a cool trillion.
Still, the likelihood is that the cost of bailing out the government-sponsored enterprises will be much lower. A number of sand-state housing markets — Arizona, Nevada, California and Florida — remain extremely fragile and might still be declining. But many other markets have stabilized. A 20 percent nationwide decline, while possible, particularly given the unemployment rate, still seems unlikely. Fannie and Freddie havethus far taken around $145 billion from the Treasury. The Congressional Budget Office predictsthe final price tag to taxpayers for stabilizing the housing market and eating loan losses will be $389 billion.
Camilo Wood
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