Many people assume that the worst of the financial crisis is over. But for a stark reminder that all is not well in the real estate industry, look no further than Fannie Mae (Fannie Mae news). The focus has been elsewhere recently, but the two big government sponsored enterprises are still reporting huge losses; Fannie said it lost $13.1 billion, or $2.29 per share, in the first quarter. And that is pushing it back to the public trough. It asked for another $8.4 billion in government assistance, to go on top of the $145 billion it and Freddie Mac (Freddie Mac news) had already accepted.

The Obama administration has said it will cover all losses through 2012 for the two GSEs. So this may turn out to be an expensive bailout. Then again, perhaps the residential real estate market is finally stabilizing. Which would help stem the losses. The larger question is what to do with tainted entities going forward. And the big question beyond that: Should the government provide a layer of safety undergirding the real estate economy. The trick may be finding a balance: a way to help the market thrive without providing perverse incentives. That's easier said than done. 

For more:
- here's the article

Related Articles:
Does the success of bank bailouts make failure again likely?
Returns on big bank TARP investments strong
Charles Prince, Robert Rubin to face inquiry
Regional banks still owe big TARP bucks
Small banks struggle with TARP repayment