The debate about the need to shore up Fannie Mae (FNM) and Freddie Mac (FRE) is focusing too much on the worst-case scenario - the possible $25 billion cost to taxpayers - and largely ignoring the low-end estimate of zero.

Yes, you read that right: It might cost the taxpayer nothing. The Congressional Budget Office (CBO) released its estimate to the House Budget Committee in a


Tuesday, saying it would take anywhere from $0 to $25 billion in taxpayer money over Fiscal Year 2009 and 2010 to help the government-sponsored-enterprises (GSE).

The proposed Treasury Department legislation authorizes the use of funds, but that doesn't mean the money has to be spent. Peter Orzag, Director of the CBO, wrote:

"The Congressional Budget Office (CBO) estimates that there is a significant chance--probably better than 50 percent--that the proposed new Treasury authority would not be used before it expired at the end of December 2009. If the proposal is enacted, private markets might be sufficiently reassured to provide the GSEs with adequate capital to continue operations without any infusion of funds from the Treasury...Under that scenario, the temporary authority would not be used and thus would involve no budgetary cost."

Orzag makes a key point that needs to be heard by market participants. The explicit backing of the federal government demonstrates the government's ability and determination to stand behind its policy directive to subsidize home ownership in America.

This is good news for shareholders of Fannie and Freddie, provided the legislation is enacted. Both Fannie and Freddie have made attempts to secure private sources of funding to bolster their bottom line. The legislation would make those efforts an almost certain success.

Whether or not you like the U.S. government subsidizing home ownership in America, it has worked. There hasn't been another deep depression like we experienced the 1930s, in part because of government intervention.

More importantly, the federal government has no choice at the present time but to support that policy. If the government eschewed its responsibility, it would do more harm and create more panic in the financial markets.

The CBO's Orzag made something else clear. Nobody knows for certain how much more pain the housing market faces in the future or the total government tab for the housing crisis.

The Housing bill in Congress definitely costs the taxpayers a chunk of change. But the tab may not end up being the full $25 billion.

Looking back to the Savings and Loan crisis of the 1980s offers some perspective on the most recent housing blowup, similarly caused by shoddy financing from investment in junk bonds. Taxpayers did wind up on the hook for the Savings and Loan crisis. The Government Accountability Office's


from 1996 concluded that taxpayers covered $160 billion in losses.

Jim Cramer has often discussed the meltdown of Citigroup and the market in 1990. A mixture of government aid and private funding staved off a crisis then. The real estate and the stock market eventually recovered and prospered.

That formula has to be followed again. Congress has to act quickly to pass the Housing legislation and then turn to funding for Fannie and Freddie. As Treasury Secretary Henry Paulsen said Tuesday:

"I am playing the hand that I have been dealt. There is a need to support efforts that strengthen Fannie and Freddie's ability to continue to play their important role in financing mortgages and in our capital markets more broadly."

Fannie Mae and Freddie Mac loan portfolio's represent $5 trillion dollars in today's housing market. This is not the time for government to step away from that responsibility -- and the commitment may not end up costing taxpayers anything.