(Corrects timing on legislative proposal to 2011 from 2012)
WASHINGTON Feb 24 U.S. Treasury Secretary Timothy Geithner said on Wednesday it was unnecessary to put the obligations of Fannie Mae FNM.N and Freddie Mac FRE.N on the federal budget and said a full plan to restructure the housing finance giants would not be offered until 2011.
"We do not think it is necessary to consolidate the full obligations of Fannie and Freddie onto the nation's budget but we do think it's very important ... that we make it clear to investors around the world that we will make sure that we will take the actions necessary" to keep the two companies stable, Geithner told the House of Representatives Budget Committee.
Geithner told the panel that the Treasury would lay out some "broad principles" for restructuring the two government-sponsored enterprises this year, but a full legislative proposal on their future would not be submitted until next year.
The Treasury under Geithner's predecessor, Henry Paulson, seized control of Fannie and Freddie in September 2008 as the financial crisis reached its height to stabilize them in midst of a housing market collapse. The Treasury pledged to cover their losses -- a commitment that late last year was made unlimited -- with taxpayer funds.
Geithner said the Treasury did not change its loss projections for Fannie and Freddie when it made the change, which was important to bolster investor confidence in them.
Nonetheless, he said putting their obligations -- which analysts estimate at well into the trillions of dollars -- onto the U.S. federal budget, would not make a difference in annual budget deficits. (Reporting by David Lawder; Editing by Kenneth Barry)