Among the nightmares lurking around the corner for the already battered housing and credit markets would be a meltdown at mortgage financing giants Fannie Mae and Freddie Mac.Once again it will be taxpayer money used to bail out businesses that made bad business decisions. Can I send the government a bill for the lemon I bought some years back? If its good enough for corporations why not for the taxpayers? This bailout will make the bailout of the Savings and Loans seem like chump change.
Although few are predicting an imminent need for a bailout just yet, credit rating agency Standard & Poor's recently placed an estimated price tag on this worst case scenario -- $420 billion to $1.1 trillion of taxpayer's money.
This dwarfs how much it cost to help banks during the savings and loan crisis of the late 1980's and early 1990's. That cost taxpayers about $250 billion in today's dollars.The long term damage that has been done to our economy is overwhelming. The treasury has been raided for the past seven years and the next generations will pay with a reduced standard of living. This all happened while the people sat by and did nothing.
S&P added that saving Fannie and Freddie might cost so much that the federal government's AAA credit rating, the top possible rating, might even be at risk. If that was lost, then all federal government borrowing would become more expensive.