S&P: Fannie, Freddie Overhaul Could Cost $685 Billion

The total cost to rescue and then overhaul mortgage giants Fannie Mae and Freddie Mac could reach $685 billion, according to estimates published Thursday by Standard & Poor's.

Fannie and Freddie have already cost taxpayers nearly $134 billion, but S&P analysts said that the government could ultimately be forced to inject $280 billion into the firms because of a slowdown in the housing market.

Any entities that might replace Fannie and Freddie would need new start-up funding that would go beyond the money already committed.

A consensus of academics, industry officials and investors has coalesced around the idea of using the government to provide explicit guarantees for securities backed by mortgages that meet certain standards. Tough questions loom over how those guarantees would be structured and priced and what entities would provide them.

Read Full Article from Wall Street Journal

- Posted: 2010-11-04 10:40:15

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