Losses at Fannie, Freddie May Hit US Books

Analysts worry that absorbing unlimited losses for the companies could increase the federal deficit.


The U.S. government’s strengthened support of mortgage lending giants Fannie Mae and Freddie Mac has some analysts worried that absorbing unlimited losses for the companies for three years could increase the federal deficit by tens of billions of dollars, reports The Wall Street Journal.

The Congressional Budget Office has said that it supports bringing the companies onto government books, a move which would essentially treat them as federal agencies for accounting purposes. The CBO has projected that the takeover could cost as much as $99 billion over the next decade.

The White House is said to be weighing various proposals for the lenders, but Chief Economic Adviser Lawrence Summers has said that the issue that is “going to play out over time.” Some officials believe that it will not be necessary to bring Fannie and Freddie onto government books in the meantime, and Assistant Treasury Secretary Michael Barr said, “I don’t anticipate any change,” adding that the lenders would “have the same appearance that they’ve had before in the budget books.”

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