Fannie, Freddie Could Hurt U.S. Credit

Wall Street Journal (04/15/08) P. C2; Natarajan, Prabha
A new report from Standard & Poor's indicates that a government bailout of Fannie Mae and Freddie Mac would cost upwards of 10 percent of gross domestic product (GDP) and jeopardize the United States' AAA rating. According to the credit rater, "Even though . . . credit damage from GSEs is unlikely, the greater risk to the U.S. lies with them than with broker-dealers." The report notes that a bailout of broker-dealers would cost the government less than 3 percent of GDP, with the bailout of Bear Stearns by the Federal Reserve pegged below 1 percent of GDP.