The Treasury had originally given both Fannie Mae and Freddie Mac a $200 billion line of credit. Even though neither company had come close reaching their current credit limit, the Obama administration had been thinking of doubling that line of credit to $800 billion total ($400 billion each). Instead of doubling the limit, the Obama administration announced late Christmas Eve that the Treasury department would give both companies an unlimited line of credit. By removing any cap on the potential loan before the end of the year, Obama was able to avoid getting Congressional approval for the decision.
We have been hearing a lot of big numbers lately due to the bailouts. It is important to put into context just how massive this loan to Fannie Mae and Freddie Mac really is (and without Congressional approval!). So consider this, the GDP of the following countries are:
South Korea – $929 billion
Netherlands – $860 billion
Turkey – $794 billion
Poland – $526 billion
Indonesia – $514 billion
Saudi Arabia – $468 billion
Norway – $450 billion
Greece – $357 billion
Argentina – $328 billion
(source World Bank 2008)
President Obama, without congressional oversight or approval, decided to give these two companies a loan equal to the entire economic output of most mid-size countries. You may agree or disagree with this move. You may think it is "necessary" because of how completely broken our Congress is. Regardless, it is important to realize the sheer size of the numbers being dicussed.
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