A new estimate by the Treasury Department shows the bailout of Fannie Mae and Freddie Mac will cost taxpayers an additional $73 billion through 2021.

Estimates by private sector analysts have ranged from $100 billion to $250 billion.

The GSEs have already drawn down $134 billion from the U.S. Treasury to cover loan losses and other costs – including a 10% interest payment on the preferred dividends they are obligated to pay the government on those borrowings.

The new estimate is 44% lower than the $134 billion in net draws requested by the GSEs to date, Treasury secretary Timothy Geithner told the Senate Banking Committee Tuesday morning.
"This estimate is consistent with the Federal Housing Finance Agency’s stress tests, which have proven to be conservative," Geithner testified.

Year end financial reports by Fannie and Freddie show the mortgage giants are close to being profitable. But they will have to continue to borrow from the Treasury to pay the 10% interest rate on outstanding draws.

Although many Republicans, and some Democrats, would like to dismantle the GSEs, some factions of the mortgage industry believe they could wind up surviving somewhat intact if politicians cannot come up with a workable plan to truly replace the liquidity they provide.

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