Analysis: GSE Subsidies to Surpass TARP

According to recent analysis released by ""Subsidyscope"":http://www.subsidyscope.com , an initiative of the Washington, D.C.-based nonprofit advocacy group ""The Pew Charitable Trusts"":http://www.pewtrusts.org , federal subsidies to the government-controlled housing financiers Fannie Mae and Freddie Mac could reach $290 billion in fiscal year 2009.
And based on figures from the ""Congressional Budget Office"":http://www.cbo.gov , the government's payouts to the GSEs' are expected to climb to $389 billion between 2009 and 2019. At those levels, ""projected subsidies"":http://www.subsidyscope.com/projects/bailout/treasury/fannie-freddie/ to these two enterprises will exceed the cost of the Troubled Asset Relief Program (TARP), which is expected to total $356 billion over the same period and provide capital support to well over 400 financial institutions.
Subsidyscope says most of the cost of subsidizing Fannie Mae and Freddie Mac was incurred when the government put the two institutions into conservatorship, but additional and ongoing subsidy costs are expected to stem from the two GSEs’ new business after the takeover. With more than two-thirds of the nation's housing market and $6.3 trillion in mortgage funding, both companies have struggled under the strains of the housing downturn and the contraction of the secondary market - leading analysts to project they will continue to dip into the Treasury's purse.
Douglas Hamilton, deputy director of Pew's economic policy department, which oversees Subsidyscope, said, ""The taxpayers are providing Fannie Mae and Freddie Mac with unprecedented levels of subsidies and they exceed the projected total of all TARP subsidies. Yet these subsidies have received relatively little attention from Congress or the media. Given their expected costs to the taxpayer, more scrutiny of these big institutions is needed to ensure that the public's interests are protected.""
The Pew Charitable Trusts launched Subsidyscope last year to increase public and policymaker attention to the size and scope of all federal subsidies. While Subsidyscope's early work has been on government funding within the financial industries, it is expanding its focus to include housing this year. The project is guided by a bipartisan advisory board of budget, tax, and financial professionals.