It doesn’t get as much attention as it should, but the biggest federal bailout recipient in recent years wasn’t a car company or a bank or any other private-sector institution.
It was government-run mortgage giants Fannie Mae and Freddie Mac.
So far, American taxpayers have shelled out more than $150 billion to rescue Fannie and Freddie. But the real spending on the Fannie and Freddie bailout has only just begun.
It is expected that the institutions will get up to $200 billion more from taxpayers over the next two or three years — bringing their total bailout potentially to $350 billion!
That isn’t to say that other bailouts, such as those of car manufacturers or banks, were wise or even constitutional. They weren’t. Government bailouts keep badly performing companies from facing the consequences of their actions, instead putting the burden of their failure on taxpayers who had no say in how the companies were run. That only encourages more bad performance.