WSJ: Fannie, Freddie Elicit Grim Forecast

In more bad news about Fanne and Freddie, the Wall Street Journal reports:

Propping up Fannie Mae and Freddie Mac will cost taxpayers $154 billion under the most likely scenario for home prices, the mortgage giants' regulator said Thursday. But the bill could end up much greater—nearly double the $135 billion already spent—if grimmer projections prove true and the economy slides back into recession.

The projections, based on the results of a home-price "stress test" by the Federal Housing Finance Agency, offered the first public estimates of the final cost of the government's rescue of the mortgage-finance firms, which is on track to become the most expensive legacy of the 2008 financial crisis.

"Today's projections show that, in the most likely economic scenario, nearly 90% of the losses at Fannie Mae and Freddie Mac are already behind us," said Jeffrey Goldstein, under-secretary for domestic finance at the Treasury Department.

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