The United States' quantitative easing policy did not impact Standard & Poor's decision to place the sovereign rating on negative outlook, but its conservatorship of Fannie Mae and Freddie Mac certainly did. One of the pressures on the credit is analysts' estimate that it could cost the U.S. government up to "3.5% of GDP to appropriately capitalize and relaunch Fannie Mae and Freddie Mac" in addition to the 1% of GDP already invested. S&P analysts said the government may have to inject as much as $280 billion into the government-sponsored enterprises, which includes $148 billion already spent, to cover losses at the housing finance companies that were put into conservatorship in September 2008. "By our estimates, that $280 billion could swell to $685 billion if the government capitalizes Fannie and Freddie on a commercial basis," S&P said. S&P's $280 billion projections for Treasury GSE support is primarily based on losses from the guarantee business, writes Margaret Kerins, a GSE credit strategist at the Royal Bank of Scotland (RBS) in a quick reaction note to clients Monday. The $685 billion is based on the government replacing Fannie Mae and Freddie Mac and proving the capital for the successor entities. "We think that this outcome is highly unlikely as it implies a government-owned entity with the taxpayers bearing the cost of capitalization," she wrote. "The majority of the housing finance proposals seek to limit government support and the cost to the taxpayers." S&P added that it does not expect the United States to default on any debt obligations. Furthermore, other economic activities of the federal government during the downturn, such as the implementation of quantitative easing, is to the country's credit, S&P stated. "We find that risks of deflation in the U.S. have lessened and that there are few indications that inflation expectations have become untethered," the report states. "Although it will be challenging to sequence the unwinding of these operations while raising policy interest rates once the recovery has become firmly rooted, we believe that the credibility of monetary policy will continue to be a credit strength for the U.S." Write to Jacob Gaffney. Follow him on Twitter @JacobGaffney.