Tab for Fannie, Freddie Bailout Pegged at $25B

But chance better than 50% feds won't need to step in: budget office
By Nick McMaster,  Newser Staff
Posted Jul 22, 2008 12:39 PM CDT
Tab for Fannie, Freddie Bailout Pegged at $25B
This July 13, 2008 file photo shows the Freddie Mac Corporate Office in McLean, Va.   (AP Photo/Pablo Martinez Monsivais, File)

A federal bailout of Fannie Mae and Freddie Mac will cost $25 billion, the Congressional Budget Office said today, but there’s a better than 50% chance no rescue will be needed. The plan sought by Treasury Secretary Henry Paulson would extend an unlimited line of credit to the government-sponsored enterprises for the next 18 months, MarketWatch reports.

The CBO’s director said enacting the bailout plan—due for congressional vote this week—will convince private markets to supply the mortgage giants with adequate levels of capital. “During that time, it is possible that expectations about the duration and depth of the housing market downturn may brighten,” the director wrote—meaning Treasury wouldn’t have to extend credit before the plan expires in December 2009. (More Fannie Mae stories.)

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