Taxpayers Face $400 Billion Bill For Bailout!

By Patrice Hill / Washington Times

The potential cost to U.S. taxpayers of bailing out Wall Street firms stricken by the credit crisis could grow to as much as $400 billion in a deep and prolonged recession, Standard & Poor's estimated yesterday.

That bill would soar by another $1.4 trillion if it included the cost of bailing out Fannie Mae, Freddie Mac and other government credit agencies, whose losses could be so massive that the U.S. government could lose its AAA rating in what would be a calamity for the U.S. Treasury and the dollar.

Standard & Poor's is one of two Wall Street credit agencies that assign ratings to the U.S. government. The ratings not only reflect on the government's strength, but they largely determine its debt costs. To assign a rating, S&P must make realistic estimates of the financial threats that arise in dire circumstances, including the possibility of a severe recession resulting from the housing collapse.

"Even under a severe stress scenario, the contingent fiscal risks of broker-dealers will not threaten the AAA rating on the U.S. government," said John B. Chambers, chairman of S&P's sovereign ratings committee, but because the government credit agencies have grown to such an enormous size, their insolvency would put pressure on the U.S. government's own finances.

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