By Alan Zibel ASSOCIATED PRESS
Fannie Mae has again asked taxpayers for more money â€” this time $8.4 billion â€” after reporting another steep loss for the first quarter. The taxpayer bill for rescuing Fannie and its sibling Freddie Mac has grown to $145 billion â€” and the final tally could be much higher.
The rescue of Fannie and Freddie is turning out to be one of the most expensive aftereffects of the financial meltdown, and Fannie Mae’s first-quarter financial report on Monday made clear that there is no end in sight.
“The losses are not going to stop” soon, said Anthony Sanders, a finance professor at George Mason University, who warns that the housing market is likely to turn sharply downward again later this year.
Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Fannie and Freddie, lifting an earlier cap of $400 billion. And with the housing market still on shaky ground, Obama administration officials say it is still too early to draft any proposals to reform the two companies or the broader housing finance system.
Republicans, on the other hand, argue the sweeping financial overhaul currently before Congress is incomplete without a plan for Fannie and Freddie. They propose amending the legislation to transform Fannie and Freddie into private companies with no government subsidies, or shut them down completely.
The legislation “touches nearly every corner of the economy,” Alabama Sen. Richard Shelby said in the GOP weekly radio and Internet address over the weekend. “But these major contributors to the crisis are left unscathed,” he added, singling out Fannie Mae and Freddie Mac.
Democrats call such arguments a diversion. They say Congress already gave the government far more power over Fannie and Freddie nearly two years ago when lawmakers passed a bill that set the stage for a government takeover of the companies in September 2008.
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