Nightly News   |  August 09, 2010

Fannie Mae, Freddie Mac seek bigger bailouts

As defaults and foreclosures continue, taxpayers are picking up most of the tab in what some predict will become the biggest bailout ever. NBC's Lisa Myers reports.

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This content comes from Closed Captioning that was broadcast along with this program.

>>> when president obama signed the financial reform bill last month, he told americans it would mean no more taxpayer bailouts, but there is one bailout that just keeps getting bigger. mortgage giants fannie mae and freddie mac have asked for $3 billion more in the last couple of days. some experts are predicting this already huge bailout could get much bigger. our report tonight from nbc's senior investigative correspondent lisa myers now.

>> reporter: joseph wabinger's arrival means the end is near. his job is to coax families out of homes they have lost and monitor foreclosed properties for big lenders.

>> i need to post this note.

>> reporter: these days, most of his business comes from the government's mortgage company, fannie mae .

>> i presently have approximately 35 properties that i'm handling for fannie mae .

>> reporter: today, more than half the mortgages in this country are owned or guaranteed by fannie mae or freddie mac which were taken over by the government two years ago. that means taxpayers are ultimately picking up much of the tab for continuing defaults and foreclosures. so far, the bailout has cost taxpayers $150 billion. and according to one congressional estimate could cost as much as $390 billion. but there is no limit. last christmas eve the treasury department quietly removed a cap of $400 billion.

>> it is the mother of all bailouts. it will be the largest bailout the taxpayers have ever seen up to this point.

>> reporter: expensive, says economist mark zandi, but necessary.

>> without that bailout the financial panic , the great recession would have been worse.

>> reporter: but this man says people should be outraged that they are picking up the tab.

>> people who made bad mortgage loans knowing they were taking risk are not being expected to take a loss whatsoever on the loans.

>> reporter: critics wonder why fannie is purchasing homes for first time home buyers who put down as little as $1,000.

>> it's perpetuating the problem. people are getting into houses and they have no skin in the game.

>> reporter: a fannie mae spokesman says the buyers have high credit scores and are carefully screened. fannie and freddie representatives say they are helping to stabilize