Fannie, Freddie Rescue will cost taxpayers $25 billion

The Fannie Mae and Freddie Mac rescue plan from the U.S. government looks set to cost the taxpayers around $25 billion over two years.

CBO, a nonpartisan agency in Washington has said that there is probable a “`better than 50 percent chance taxpayer funds won’t be needed to save the two largest mortgage- finance providers, though, that scenario is far from the only possible result.”

There are many analysts who think that there is likelihood that the conditions in the housing and financial markets could get even worse than it is now, this is already being reflected in both the mortgage lenders finances.

The Treasury and the White House budget office has refused to estimate how much this bailout will cost however; Senators Jon Tester of Montana and Richard Shelby of Alabama think that it could end up costing $1 trillion.

Treasury Secretary Henry Paulson has said that he anticipated legislation will be passed this week to authorize his July 13 request for authority to extend credit to the mortgage-finance companies or take an equity stake.

Paulson has also said that Fannie Mae and Freddie Mac own or guarantee almost half the $12 trillion in U.S. home loans outstanding, and thereby pose little cost to taxpayers.

Source