U.S. CBO forecasts initial costs of financial bailouts

WASHINGTON (Reuters) - The federal government's takeover of housing mortgage giants Fannie Mae and Freddie Mac will contribute about $240 billion (158.4 billion pounds) to the record $1.186 trillion U.S. budget deficit this fiscal year, the Congressional Budget Office forecast on Wednesday.

CBO, Congress' nonpartisan budget analyst, also said government outlays this year will include more than $180 billion related to the cost of the Wall Street bailout program that Congress passed in October, giving the Bush administration up to $700 billion in emergency money.

It is not yet clear whether the federal government will be able to recoup the costs of the financial industry bailout.

(Reporting by Richard Cowan)