Subprime Bailout Close to $1 Trillion
This brings the total to $980 billion that the Federal government has pumped into the financial markets as a result of the Subprime Mortgage Crisis. For a complete rundown of all the Fed interventions, see Federal Reserve and the Banking Liquidity Crisis.
What It Means to You
In all likelihood, the Federal government's actions have avoided a financial meltdown. Although it is possible that the economy is already headed for a recession, it will be less painful than if the government had done nothing.However, if Fannie Mae, Freddie Mac, the Fed and the Federal Home Loan Banks get stuck with the $980 billion in bad debt, then this will cost taxpayers almost ten times as much as the Savings and Loan Crisis, which "only" cost the taxpayers $124 billion.
Even if this worst case scenario does occur, the net result is that this debt would get added to the $9 trillion national debt. This would contribute to a chronic situation that has depressed the dollar and raise the price of imports.
For those homeowners that are facing foreclosures, the Fed has a list of resources on its web site at Foreclosure Resources for Consumers.
Comments
As a taxpayer why should I have to pay for someone Else’s extravagance and irresponsible actions! I have to live on a budget. If I get something extravagant I have to save and plan for it. If I can’t afford it or save for it I don’t buy it. I certainly would not expect someone else to pay for it. It’s time to pay the piper for those who have not lived within their means - big lessons for you!
Hi Teresa,
I don’t think a single borrower will receive a dime of that bailout money. It is going, instead, to the banks who made the loans to avoid a total financial meltdown.
In all likelihood, $1 trillion loan guarantees will not be needed, a year from now the markets will be back to normal,and the taxpayers won’t be out a single penny.
Kimberly