Although it was anticipated that the White House would bail out Fannie and Freddie to the tune of $800 billion before the end of the year to avoid getting congressional approval, the Christmas eve news dump made it clear that the slush fund would instead be limitless.

And despite the fact that Fannie and Freddie hold some $6 trillion in mortgages, there is still no Inspector General conducting independent oversight.

The slush fund can be used for buying up toxic mortgages from the banks, which may need a place to be stashed once the Fed stops their MBS repurchase program in March of next year.

According to Calculated Risk, the banks got a bailout but the foreclosures will continue in January:

Fannie, Freddie and most of the large banks routinely suspend foreclosure activity over the holidays. This has been true this year too. Fannie and Freddie’s holiday moratoria ends Jan 3, 2010, and Citi’s holiday moratoria ends Jan 17th. The other banks programs end in early January too.

Analysts are predicting that this will be “the largest cost to tax payers of all of the financial bailout programs.” It was done under the authority granted by the Housing and Economic Recovery Act (HERA) of 2008, which Rahm Emanuel cosponsored and pushed through shortly before he left for the White House.

And on Christmas eve, it was also announced that compensation packages of $4-$6 million were approved for Fannie & Freddie’s top executives.

The elite who created this mess are rewarded for their continued failure, because any solution to the foreclosure crisis apparently has to make the banks rich in the process.  Just as it is with the insurance companies, the banks expect to be paid handsomely in any government program that addresses the problems they created.

There needs to be an investigation.

Update: Fannie and Freddie shares soar on the bailout news, 17% and 21% respectively.

Update II: Marla Singer of ZeroHedge: “As they hit 5%, and when they think no one is listening, Freddie whispers that 30-year rates could climb to 6% in 2010. (Rahm: “No big thing.  Just sayin’ is all.”) [reuters]“