U.S. editorial excerpts -3-

NEW YORK, April 17 Kyodo

Selected editorial excerpts from the U.S. press:

'10% OF GDP' (The Wall Street Journal, New York)

Is Washington looking in the wrong place for financial market risk to taxpayers? According to a new study by Standard & Poor's, the answer is yes.

Congress is disturbed about the bailout risk from the Federal Reserve opening its discount window to borrowing from investment banks and broker-dealers. That's a reasonable concern, especially with the Fed guaranteeing $29 billion in dodgy Bear Stearns paper. But according to S&P, the ''maximum potential cost'' of bailing out Wall Street would be below 3% of GDP, assuming a deep and prolonged recession. That's painful, but not catastrophic.

Guess where the far greater danger comes from? If you said Fannie Mae and Freddie Mac, you are a faithful reader of these columns and we bow before you. According to the S&P study, the taxpayer risk from Fan and Fred, combined with that of other government-guaranteed agencies, ''yields a potential fiscal cost to the government of up to 10% of GDP.'' With total U.S. GDP estimated at somewhere north of $14 trillion, that would put the Fan and Fred bailout cost at about $1.4 trillion. Yowza. This ''fiscal burden'' would be so large, in fact, that S&P figures it could even jeopardize the AAA credit rating of the U.S. government. (April 17)

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