A high ranking Democrat on the House Financial Services Committee wants to explore ways of recouping the cost of placing the government-sponsored enterprises into conservatorships.
"As our housing markets begin to stabilize, we will begin to consider innovative ideas for recovering the costs resulting from the decision to place Fannie Mae and Freddie Mac into conservatorship," said Rep. Paul Kanjorski, D-Pa.
"Twenty years ago, we found a way for industry to pay back the sizable U.S. Treasury payments for resolving the savings-and-loan crisis. We can do it again," he said.
The bailout of Fannie and Freddie has already cost the Treasury Department $150 billion which is close to what the government paid to save the S&L industry in the late 1980s. The problem with Fannie and Freddie is that their losses are continuing with no end in sight. (Both will report 2Q earnings in a few weeks.)
To reduce the government cost of the S&L bailout, Congress turned to the Federal Home Loan Bank System, requiring them to pay $300 million annually to cover the interest payments on $30 billion of government issued bonds. The proceeds were used to resolve hundreds of failed S&Ls with the FDIC selling off their assets to the highest bidder.
