Putting a Price Tag on Bailouts: It’s Time to Make the Fed Accountable Too

As the debate continues over the wisdom or lack thereof of Congress having given Treasury Secretary Paulson a blank check to keep Fannie and Freddie afloat over the next 18 months, a point that seems largely overlooked is that there was only one realistic alternative. Either Congress could explicitly provide a financial backstop such as the one just enacted, or the Federal Reserve could later ride to the rescue a la Bear Stearns should the need arise. After all, there is widespread agreement that Fannie and Freddie are too big, and at the moment too important, to fail, and that taxpayers are ultimately on the hook.

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How Much Will the Fannie and Freddie Bailout Cost Taxpayers?

It’s official.  After the administration’s protestations to the contrary last week – read my lips, no new bailouts – this morning Treasury announced a plan to inject “billions of dollars in loans and investments” to shore up Fannie and Freddie.

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