(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
(Reporting by David Lawder; Editing by Kenneth Barry)