A Fannie-Freddie Rescue Could Cost $25B

New York Newsday (07/23/08)
Taxpayers might have to pay as much as $25 billion to prop up Fannie Mae and Freddie Mac, according to Peter Orszag, the top budget analyst for Congress. Orszag warns that inaction on a temporary lifeline for the mortgage finance giants could also be costly, given that the financial markets are already assuming that the measure will pass. "It is arguable that if it were not enacted at this point, that the consequences could be quite severe," says Orszag, director of the Congressional Budget Office. Congress is expected to vote this week on a rescue plan to lend Fannie Mae and Freddie Mac money or buy stock, and the financial markets believe it will be approved.