Fannie, Freddie rescue plan to cost $25 bln

MNB

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

But there is less than a 50% 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% - 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 in debt and mortgage backed securities guarantees issued by these two companies, over $3 trillion is held by US financial institutions, and over $1.5 trillion 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. (Xinhua)

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