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A new and extensive analysis of 2.4 million loans insured by the Federal Housing Administration in recent years shows a pattern of risky lending that could generate $20 billion in losses and harm thousands of the nation's most vulnerable borrowers. By ignoring risks in loans it insured in 2009 and 2010, the study concludes, the F.H.A. is imperiling both borrowers and taxpayers who stand behind the agency.

The analysis emerged less than a month after the F.H.A.'s auditor submitted a troubling report on the financial soundness of its insurance fund. In mid-November, the auditor estimated that the fund, which backs $1.1 trillion in mortgages, has a value of negative $13.5 billion. In other words, if it were to stop insuring loans today, the F.H.A. fund could not cover the losses anticipated on loans it has already insured.

The new study of the potential risks in recent F.H.A.-insured loans is illuminating because it provides a level of detail, including where government-backed loans are, that is usually missing from agency analyses. In addition, the report's loss estimates are somewhat surprising given that the loans it examined were made after the mortgage crisis became evident.

The loan analysis was conducted by Edward Pinto, a resident fellow at the American Enterprise Institute, a conservative organization. But its findings were based entirely on foreclosure estimates made by the F.H.A.'s auditor as well as detailed individual loan data like ZIP codes and borrower credit scores.

The U.S. tax code has many politically sacrosanct tax breaks and few rank higher than the deduction for home mortgage interest.
 

For decades, politicians have feared even to speak its name, let alone debate putting limits on it, because of its status as a cherished mainstay of the American dream of home ownership.

But that may be changing as Washington grapples with ways to reduce the budget deficit and avert the "fiscal cliff" of automatic spending cuts and tax increases that will begin to take effect on Jan. 1 unless Congress takes action soon.

The mortgage interest deduction is estimated to cost the Treasury about $100 billion a year, making it one of the costliest tax breaks contained in a tax code that has not been revamped in 26 years and is riddled with loopholes.

The deduction allows about 35 million homeowners a year to write off their mortgage-interest payments.

"The mortgage interest deduction used to be a sacred cow that you couldn't touch; that's just not the case anymore. For the first time it's truly vulnerable," said Jaret Seiberg, senior policy analyst at Guggenheim Securities.

Five weeks after President Barack Obama won re-election and gained more leverage to make GOP conservatives bend on taxes, the new balance of power is proving vexing for both sides.
 

Republicans still aren't budging on Obama's demands for higher tax rates on upper bracket earners, despite the president's convincing election victory and opinion polls showing support for the idea. (Read More: Obama Has 'Mandate' to Increase Taxes on Rich: Poll.)

Democrats in turn are now resisting steps, such as raising the eligibility age for Medicare, that they were willing to consider just a year and a half ago, when House Speaker John Boehner was in a better tactical position.

With less than three weeks before the government could careen off a "fiscal cliff" of automatic tax hikes and sweeping spending cuts, Boehner, R-Ohio, said "serious differences" remain between him and Obama after an exchange of offers and a pair of conversations this week.

If Japan's opposition the Liberal Democratic Party (LDP) headed by Shinzo Abe wins the December 16 polls, it is widely expected that an era of aggressive monetary easing will be unleashed in the country. But one expert says this will do little to prop up growth in the world's third largest economy which is reeling under its fifth recession in 15 years.

"I don't think it's going to work. QE (quantitative easing) is good at containing the downside, addressing crisis and disruptive markets, but it definitely doesn't give you traction in regenerating demand in the real economy," Yale University senior fellow Stephen Roach told CNBC on Friday.

(Read more: Investors In for Bumpy Ride Aboard the 'Abe Trade')