Goldman: No turning point for U.S. housing from GSEs plan

NEW YORK (Reuters) –

A major U.S. government plan to shore

up mortgage finance firms Fannie Mae (FNM.N) and Freddie Mac

(FRE.N) will not revive the ailing U.S. housing market yet,

wrote Goldman Sachs economists in a research note dated Sunday.

“Ultimately, we do not view these measures, dramatic as

they look, as either a turning point for the U.S. housing

market or as a sign that the downturn will be much worse than

previously believed,” Goldman Sachs analysts including

economist Jan Hatzius wrote in the note.

The U.S. Treasury and Federal Reserve plan, announced on

Sunday, called for sweeping measures to lend money and buy

equity if necessary in the government-sponsored enterprises,

which own or guarantee $5 trillion in debt — close to half the

value of all U.S. mortgages.

The measures by the U.S. Treasury and the Federal Reserve

to underpin the mortgage giants “simply reaffirm our long-held

— and widely shared — view that the government will do

everything it can to avert a meltdown in the conforming

mortgage market and will continue to stand behind the

government-sponsored enterprises,” Goldman wrote.

Congressional approval for the plan “is highly likely,” the

analysts wrote, because U.S. Treasury Secretary Henry Paulson

has said he has consulted with Congressional leaders of both

parties and because of “the political peril of standing in the

way of measures to support the flagging housing market.”

(Reporting by John Parry; Editing by Chizu Nomiyama)