The U. S. Treasury blocked Fannie Mae's proposed sale of nearly $3 billion in low-income housing tax credits to Goldman Sachs Group Inc. and Berkshire Hathaway Inc. on Friday after concluding that the deal was too costly for taxpayers.

Treasury Department officials blocked the deal after concluding that it would have resulted in a greater loss of tax revenues as compared to the savings to the federal government, had it allowed the sale. "In short, withholding approval of the proposed sale affords more protection of the taxpayers than does providing approval", an administration official said in a statement.

The sale of the tax credits would have helped stabilize Fannie Mae. The company on Thursday said bad mortgages and a federal foreclosure prevention program left it with an $18.9 billion loss, forcing it to tap a Treasury line of credit again to plug a hole in its net worth.

Fannie Mae's regulator, the Federal Housing Finance Agency, had told the housing finance company it did not object to transferring the credits. The deal pitted two government agencies against each other over how best to run Fannie and its smaller rival, Freddie Mac. The government took over both mortgage-finance companies 14 months ago through a legal procedure known as conservatorship.