WSJ says FHA will probably need a bailout before long:

“Asked at the hearing whether the FHA would need a bailout, HUD Inspector General Kenneth M. Donohue said he couldn’t predict. “Based on the numbers we’re seeing, I think it’s going in the wrong direction,” he said.”

What is the reason for the needed bailout? Well, er, bailing out other banks….

“In an interview Wednesday, Mr. Donovan said that the agency may need to sustain losses to keep backstopping lenders who otherwise wouldn’t make loans. “[W]hile we’re rightly concerned about the safety and soundness of FHA…we also need to be focused on the fact that credit is critical to the economic health of the country,” he said.”