CBO: 50%+ Chance of Treasury GSE Infusion

The Congressional Budget Office estimates that there is a greater than 50% chance the Treasury Department will need to invest in Fannie Mae or Freddie Mac, which could add up to $25 billion to the federal budget during fiscal years 2009 and 2010. The Treasury is asking Congress to pass emergency legislation that would allow it to invest in Fannie Mae and Freddie Mac securities if necessary. Such investment authority would end in 2010. The CBO notes that if legislation is passed, "private markets might be sufficiently reassured to provide the [government-sponsored enterprises] with adequate capital to continue operations without any infusion of funds from Treasury." The CBO unveiled its estimates in a letter to Rep. John Spratt, D-S.C., chairman of the House Budget Committee.