When you know you are about to do something unpopular you try to hide it. For instance, the public would never know that over 140 banks (not counting credit unions) have gone under this year because their announced failures only happen on Friday evenings.
Another extremely unpopular event would be another round of bailouts for Wall Street banks. That's why the provisions are hidden deep within the financial reform bill.

For all its heft, the bill doesn’t once mention the words “too-big-to-fail,” the main issue confronting the financial system.
Instead, it supports the biggest banks. It authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. So much for “no-more-bailouts” talk. That is more than twice what the Fed pumped into markets this time around. The size of the fund makes the bribes in the Senate’s health-care bill look minuscule.

Believe it or not, this is not the most outrageous thing Washington has done in the last week.

On Christmas Eve, the one day that Washington is certain the public will be distracted, Congress lifted all limits on bailouts for Fannie Mae and Freddie Mac.

Treasury is now amending the PSPAs to allow the cap on Treasury's funding commitment under these agreements to increase as necessary to accommodate any cumulative reduction in net worth over the next three years. At the conclusion of the three year period, the remaining commitment will then be fully available to be drawn per the terms of the agreements.

Fannie and Freddie already had a $400 Billion credit line with the Treasury, $110 Billion of which they have already used for bailouts. Putting two and two together adds up to expected losses exceeding $400 Billion.

(Bloomberg) -- Taxpayer losses from supporting Fannie Mae and Freddie Mac will top $400 billion, according to Peter Wallison, a former general counsel at the Treasury who is now a fellow at the American Enterprise Institute.
“The situation is they are losing gobs of money, up to $400 billion in mortgages,” Wallison said in a Bloomberg Television interview.

Normally when a person, or company, is hemorrhaging money by the buckets the creditors (in this case the taxpayers) would step in and say, "We'll bail you out, but you have to take steps to prevent further losses in the future." Right? That's how bankruptcy is supposed to work.

Not in this case.
Instead of demanding more accountability and less future losses, government regulators have told Fannie and Freddie that they are free to take on even MORE risk.

When the Treasury Department took over Fannie and Freddie last year, one of the requirements they set for the companies required them to begin shrinking their portfolios of mortgages and related investments, which total a combined $1.5 trillion. The idea was to rein in the companies' size and growth.
But last Thursday, the Treasury eased that requirement, meaning the companies won't be forced to sell mortgages into an already weak market and could even buy mortgages on the market, which could help hold down interest rates.

Expanding a portfolio that is already hemorrhaging money is a sure-fire loser of a strategy.

Since we didn't have enough money for real health care reform, why do we have unlimited amounts of money for the mortgage industry? To answer that just look a couple paragraphs further down the article.

Mahesh Swaminathan, senior mortgage analyst at Credit Suisse, said the firms could use their increased capacity to purchase delinquent loans from pools of mortgage-backed securities that they guarantee. Fannie and Freddie already purchase defaulted loans as they modify them under the administration's loan-modification program, but the additional breathing room means it is now a "slam-dunk for them to speed up" purchases of delinquent loans, Mr. Swaminathan said. New accounting rules that take effect next year also could make it more cost-effective for the companies to buy out bad loans and keep them in their investment portfolios.

The idea is for Fannie and Freddie to buy more defaulting mortgage-backed securities. Who is holding those defaulted mortgage-backed securities? Why Wall Street banks, of course.

This is another Wall Street bailout via backdoor.

Why now? Because the Federal Reserve is winding down its $1.25 Trillion mortgage-backed securities purchase program this spring. For the past 9 months, the Fed has been the mortgage market.
Since the Federal Reserve's portfolio is already poisoned with these toxic assets to the point of insolvency, the risk must be transferred to the Treasury.

Others said the new flexibility means that Fannie and Freddie could replace the Fed as a big buyer of mortgage-backed securities, especially if weak demand for mortgage-backed securities from private investors drives rates higher.
"It's created a government-purchasing facility other than the Fed," said Karen Shaw Petrou, managing partner of Federal Financial Analytics, a research firm in Washington.

At this point you must ask yourself if there is any measure that the politicians in Washington won't stoop to in order to bailout their Wall Street masters? The Wall Street bankers are reporting record profits and record bonuses and why shouldn't they? After all, when you can offload all your bad investments to the taxpayer, while keeping all your winning investments, why shouldn't the champagne flow this New Year's Eve?