Congress’ top budget analyst says a federal rescue of troubled mortgage giants Fannie Mae and Freddie Mac could cost taxpayers as much as $25 billion. But Peter R. Orszag, director of the Congressional Budget Office, predicted in a letter to lawmakers Tuesday that there’s a better than 50% chance the government will not have to step in to prop up the companies by lending them money or buying stock.
[Treasury Secretary Henry] Paulson noted that of the nearly 8,500 insured banks and thrifts in the country, 99% are considered well-capitalized, meaning that they have sufficient reserves to protect against losses on loans. He said the failure of one thrift and four commercial banks this year was “hardly comparable” to the period of the savings and loan crisis during the 1980s when there were an average of 255 failures per year.
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