The rescue plan for giant mortgage companies Fannie Mae and Freddie Mac promises credit and possible stock purchases. It might cost the U.S. nothing — or it might cost $25 billion. The rescue package has to pass through the Senate Banking Committee, and its chairman, Christopher Dodd (D-CT), is at the center of the debate.

Supporting the companies and their stockholders is important, Dodd says, because "there's a great risk that the people holding the debt are going to dump it. And it isn't just debt being held in this country; it's being held globally ... and if they decided to dump that debt tomorrow, you could have a collapse globally."

Dodd tells Steve Inskeep that the entire architecture of the financial services sector needs to be restructured. In the meantime, though, the Bush administration's plan — which would temporarily underwrite Fannie Mae and Freddie Mac with additional loans and prop up the stock price — will provide "critical confidence" in the system to help stabilize the markets.

The plan is designed to offer some assurance that the federal government will step in if it has to, that "we're not going to allow this to fail." At this point, the expression "too big to fail" probably applies, Dodd says. "I don't think it applied to Bear Stearns; it applies here."

The problem is not going to be solved by the federal government, but by the private marketplace, Dodd says, and the government now must play a supportive role.

"I'm worried about the dual role. Investor confidence and taxpayer exposure — walking that thin line is not an easy path, but ... doing nothing is not an option at this juncture. We have to shore up that confidence."

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