Fannie Mae and Freddie Mac, the government-backed mortgage lenders that helped fuel the housing crisis, will cost taxpayers at least $400 billion. Yay... happy new year!

Dec. 31 (Bloomberg) -- Taxpayer losses from supporting Fannie Mae and Freddie Mac will top $400 billion, according to Peter Wallison, a former general counsel at the Treasury who is now a fellow at the American Enterprise Institute.

“The situation is they are losing gobs of money, up to $400 billion in mortgages,” Wallison said in a Bloomberg Television interview. The Treasury Department recognized last week that losses will be more than $400 billion when it raised its limit on federal support for the two government-sponsored enterprises, he said.

The U.S. seized the two mortgage financiers in 2008 as the government struggled to prevent a meltdown of the financial system. The debt of Fannie Mae, Freddie Mac and the Federal Home Loan Banks grew an average of $184 billion annually from 1998 to 2008, helping fuel a bubble that drove home prices up by 107 percent between 2000 and mid-2006, according to the S&P/Case- Shiller home-price index.

Fannie Mae and Freddie Mac... end them, don't mend them. Why do we need them anyway? During the last 3-4 years, we've seen firsthand what happens when companies lend money to "homeowners" who can't afford to pay it back -- they default or simply walk away because they have nothing to lose. Interest only, no income verification loans with no money down is a recipe for a housing crisis and a global financial meltdown.

We need responsible legislators who will end programs like these, but instead, we have Democrats who will only seek to make them larger.

Fannie Mae and Freddie Mac, the government-backed corporations that fueled the housing crisis, received a Christmas miracle. The Obama administration agreed to cover unlimited losses for the next three years AND they rewarded Fannie and Freddie executives with $6 million in bonuses for a job well done.

Now I know why they waited until Christmas Eve to drop this bomb. From the Wall Street Journal...

Doubling down on stupidThe Treasury announced Thursday it was removing the caps that limited the amount of available capital to the companies to $200 billion each.

Unlimited access to bailout funds through 2012 was "necessary for preserving the continued strength and stability of the mortgage market," the Treasury said. Fannie and Freddie purchase or guarantee most U.S. home mortgages and have run up huge losses stemming from the worst wave of defaults since the 1930s.

"The timing of this executive order giving Fannie and Freddie a blank check is no coincidence," said Rep. Spencer Bachus of Alabama, the ranking Republican on the House Financial Services Committee. He said the Christmas Eve announcement was designed "to prevent the general public from taking note."

Treasury officials couldn't be reached for comment Friday. [Editor: Of course not!]

So far, Treasury has provided $60 billion of capital to Fannie and $51 billion to Freddie. Mahesh Swaminathan, a senior mortgage analyst at Credit Suisse in New York, said he didn't believe Fannie and Freddie would need more than $200 billion apiece from the Treasury. But he and other analysts have said the market would find a larger commitment from the Treasury reassuring.

That is reassuring. After all, Fannie and Freddie loaned billions of dollars to people who couldn't afford to pay back their loans and then they sold their worthless paper to other financial institutions in the form of mortgaged backed securities, thereby infecting the global financial system with steaming piles of worthless paper.

Instead of dismantling Fannie Mae and Freddie Mac so that this never happens again, we're throwing more money at them and we're asking them to lower their already low lending standards in the name of "affordable housing."

We are the dumbest people walking the planet.