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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Knighty Tin who wrote (10406)3/18/2004 2:56:45 PM
From: ild  Read Replies (2) of 110194
 
WASHINGTON (Dow Jones)--The Congressional Budget Office now estimates the federal subsidies received by the government-sponsored enterprises Fannie Mae, Freddie Mac and the Federal Home Loan Bank System to be worth $23 billion a year, CBO Director Douglas Holz-Eakin said Thursday.

The CBO updated its estimates in a luncheon speech before Women in Housing and Finance, a group of Washington policy-makers and executives. The CBO last valued the GSE subsidy at $13.6 billion in 2000.

That includes their exemptions from paying securities filings fees as well as state and local income taxes. It also takes into account the preferred rates they get in the secondary mortgage markets because of their implied federal backing, among other things, Holtz-Eakin said.

"In an era where budgetary resources are scarce, a subsidy of that magnitude stands out," he said. "The budgetary competition for resources will become more pronounced."



Holtz-Eakin noted that the growing budget deficit coupled with increasing numbers of retiring baby boomers and fewer workers will force Congress to rethink the way it allocates capital. "That allocation may include less in the form of residential housing and more in the forms of other capital investments," he said.

"Housing has been a stalwart of the past couple of years. But in this new policy environment, it may be the case that our perception of the appropriate way to deal with housing policy objectives will change and the budgetary objectives will change with it," he said.
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