The Federal government announced yesterday its bailout plan for troubled mortgage finance companies Freddie Mac and Fannie Mae, but neither the Treasury Secretary or market analysts know exactly how much this government buyout is going to cost taxpayers in the end.

“I have long said that the housing correction poses the biggest risk to our economy,” said Treasury Secretary Henry Paulson in prepared remarks Sunday. “It is a drag on our economic growth, and at the heart of the turmoil and stress for our financial markets and financial institutions. Our economy and our markets will not recover until the bulk of this housing correction is behind us. Fannie Mae and Freddie Mac are critical to turning the corner on housing.”

Paulson said that the new goal for the government, by running Fannie and Freddie, will be primarily to increase the availability of mortgage financing to the public. 

The two government-sponsored entities back a large percentage of U.S. home loans, and faced with combined losses of $14 billion over the last four quarters, they were likely to fail soon without government intervention. The result would have left millions of home buyers without mortgage financing, further depressing the ailing housing market.

The government predicted that the move would lower interest rates for borrowers with good credit and bolster the stock market with assurances of Freddie and Fannie stability.

Yet the long-term cost to the nation could be in the range of tens of billions of dollars, according to many analysts.

“No one likes to put taxpayers into situations like this,” Paulson said in a Monday interview with Bloomberg Television. “Government intervention is not something I came down here wanting to espouse, but it sure is better than the alternative.”

Asked about the total costs of the bailout by CNBC reporters, Paulson replied “We ultimately don’t know.” He said it will depend on “how long it will take for housing prices to stabilize and the housing market to come back.”

Still by taking over Freddie and Fannie, Paulson reassured Americans in his speech Sunday that the Treasury has “acted on the responsibilities we have to protect the stability of the financial markets, including the mortgage market, and to protect the taxpayer to the maximum extent possible.”