Fannie, Freddie Rescue Plan to Cost 25 Billion Dollars

U.S. Treasury Department's rescue plan for troubled mortgage giants Fannie Mae and Freddie Mac could cost taxpayers 25 billion dollars, the Congressional Budget Office said Tuesday.

But there is less than a 50 percent chance of that happening, noted Peter R. Orszag, director of the Congressional Budget Office in a letter to lawmakers.

The CBO estimates that there is a significant chance -- probably better than 50 percent -- that the proposed new Treasury authority would not be used before it expired at the end of December 2009, he said.

Treasury Secretary Henry Paulson has urged Congress to pass this week his proposal to support the troubled Fannie Mae and Freddie Mac.

Of the 5 trillion dollars in debt and mortgage backed securities guarantees issued by these two companies, over 3 trillion dollars is held by U.S. financial institutions, and over 1.5 trillion dollars is held by institutions and central banks overseas, said Paulson in a speech delivered at the New York Public Library on Tuesday.

Because of their size and scope, Fannie and Freddie's stability is critical to financial market stability, he noted.

Source: CRIEnglish