NPR logo America's Pet Platypus Needs Another $10.6 Billion

Housing

America's Pet Platypus Needs Another $10.6 Billion

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"Send money." Nicole Duplaix/Getty Images hide caption

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Toxie, Planet Money's pet toxic asset, may not have been the savviest investment. But at least our exposure is capped at $1,000.

That looks pretty good compared to Fannie and Freddie — the toxic twin platypuses that have already cost U.S. taxpayers more than $100 billion.

And Freddie alone will need another $10.6 billion this quarter, after losing $6.7 billion in the first three months of this year, the platypus said yesterday.

Ben Bernanke recently described Fannie and Freddie as platypuses because they were taken over by the government in 2008, and they're currently in a no-man's land between public and private. Everybody agrees that this is unsustainable, but it's unclear what the government's going to about it.

The formerly independent firms were originally created by the government. Their basic job was to buy mortgages made by banks, then sell bundles of those mortgages to investors, along with a guarantee that the mortgage would be paid back. The companies were wildly overleveraged during the boom and got totally crushed in the bust.

In Freddie's quarterly earnings announcement yesterday, the CEO said:

[W]e are seeing some signs of stabilization in the housing market, including house prices and sales in some key geographic areas. But as we have noted for many months now, housing in America remains fragile with historically high delinquency and foreclosure levels, and high unemployment among the key risks.

Translation: Taxpayers aren't done paying for the platypus.

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