CBO Estimates $25B Cost To U.S. for Aiding GSEs

The plan to secure government-sponsored enterprises that deal with housing could cost $25 billion over fiscal years 2009 and 2010, the Congressional Budget Office said yesterday.

The “estimate accounts for both the possibility that federal funds would not have to be expended under the new authority and the possibility that the government would have to use that authority to provide assistance to the GSEs,” CBO director Peter R. Orszag wrote in a letter to House Budget Committee chairman John M. Spratt Jr.

The government last week proposed temporarily allowing the Treasury to purchase any amount of obligations and other securities issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.

“Enacting this proposal could have no direct federal budgetary cost if the secretary does not exercise the temporary authority, or it could have a significant cost if the secretary must lend or otherwise provide funds to keep the GSEs financially viable,” the CBO said.

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