Fannie and Freddie keep rolling along

A front page story in today's NYT publicizes what many economists have long known: at the end of the day we are going to spend a lot more bailout dollars on mortgage repackagers Fannie Mae and Freddie Mac than we will on AIG and a bevy of banks.   The bill right now stands at $146 billion, but the Congressional Budget Office estimates that it will eventually hit $389 billion.  Nothing has really changed for these two institutions; those who bought their mortgage-based securities always assumed they were guaranteed against default by the US Treasury even though there was never any explicit commitment.  Now Uncle Sam owns and runs both agencies and there has yet to be any serious debate in Washington about how they should be managed in the future.  Another case of financial institutions that are too big -- and too politically connected -- to fail.