The Next Bailout

Bloomberg has an article today speculating that Fannie and Freddie, the mortgage giants with tacit government backing, need more capital. The question becomes where will they get the capital? It is likely that the U.S. government will foot the bill. Unfortunately, I have to say that a bailout by the USG is probably necessary given the liquidity these two institutions provide for our mortgage markets. Also, if Fannie and Freddie lost tacit backing, the cost of funds for mortgages would likely sky rocket. The worst part is that Fannie, Freddie, and Congress all had a hand in creating the broken system and now because of their mistakes, we'll be footing the bill. Thanks guys.