A number of senators on the banking committee - from both parties - characterized Paulson’s request as asking lawmakers for a “a blank check,” and they were none too keen on the idea, knowing they have to answer to taxpayers.
How lawmakers might alter the Treasury’s proposals isn’t clear yet. But if the government uses federal dollars to help Fannie and Freddie, the cost to taxpayers could be minimal if the rescue plan works. That is, if government efforts bolster the companies, they likely would be able to pay back what they owe.
“Taxpayers may get it all back with interest,” said Rudolph Penner, a former director of the Congressional Budget Office and currently a senior fellow at the Tax Policy Center.
But the taxpayer cost could increase if Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) default on their debt or if their stocks lose value. This year, they’ve already fallen over 80%, with the bulk of those losses coming this month.
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