Yoski

Welcome to the Mortgage Business

The cost to the taxpayer will be more like $200-300 billion given the current state of affairs (5% losses on $5 trillion in assests).
"To promote stability in the secondary mortgage market and lower the cost of funding, the GSEs will modestly increase their MBS portfolios through the end of 2009."
This means there will be substantially more questionable mortgages added from now until the end of 2009 and probably well beyond. Banks get to off load all their junk and in addition get to make more sub-prime mortgages. They get to keep the profits and unload the risk right onto the taxpayer. In the end it will probably cost in excess of $1 trillion dollar and might only stop once the US government is insolvent. Let's not forget, in addition we have to bailout auto makers, airlines, monolines and foreign countries we tend to invade from time to time. The leading edge of the boomers is taking early retirement this year. In the end, the only way this can be paid for is the monetization of debt, ie. hyper inflation. It might be another 10-15 years before this happens, but the ground work is being laid today.