WASHINGTON - July 22, 2008 -
Treasury Secretary Henry Paulson's rescue package for Fannie Mae and Freddie
Mac would probably cost taxpayers $25 billion, the Congressional Budget Office
said.
“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,” the nonpartisan agency, which provides economic and budget analysis for lawmakers, said in a report today.
Democratic lawmakers were seeking to determine the cost of Paulson's plan to offer emergency funding to Fannie Mae and Freddie Mac, which own or guarantee almost half of the $12 trillion in U.S. home loans outstanding. Paulson today said Congress understands “the demands” of the housing downturn and will likely approve this week his request to help the government- sponsored enterprises.
“We need to act in the short-term because GSEs are vital institutions in our capital markets today and are vital to emerging from the housing correction,” Paulson, 62, said in a speech in New York. Fannie Mae and Freddie Mac are among the “most interconnected of all global financial institutions,” he said.
Fannie Mae fell $1.61, or 11 percent, to $12.52 at 9:35 a.m. in New York Stock Exchange composite trading. Freddie Mac dropped $1.25, or 14 percent, to $7.50.