0714 US Mortgage Giants_Color
**FILE** This May 2, 2007 file photo shows the Fannie Mae building in Washington. The U.S. Treasury and the Federal Reserve announced steps Sunday, July 13, 2008 to shore up mortgage giants Fannie Mae and Freddie Mac. (AP Photo/Manuel Balce Ceneta, file)

Monday, 14 July 2008
Feds show plans to save Fannie and Freddie Print E-mail
Jeannine Aversa - The Associated Press   

WASHINGTON -- The U.S. Treasury and the Federal Reserve are announcing steps to shore up mortgage giants Fannie Mae and Freddie Mac.

Shares of the two companies have plunged in recent weeks as losses from their mortgage holdings surged, threatening their financial survival.

 

Secretary Henry Paulson said the government is planning to expand its current line of credit to the two companies should they need to tap it and Treasury could buy equity captial in the companies -- if needed. The moves will require congressional approval.

The Federal Reserve says in a separate statement that it will lend to Fannie Mae and Freddie Mac if they need additional funds.

The plans released on Sunday also seek a "consultative role" for the Federal Reserve in any new regulatory framework eventually decided by Congress for Fannie and Freddie. The Fed's role would be to weigh in on setting capital requirements for the companies.

Fannie Mae and Freddie Mac either hold or back $5.3 trillion of mortgage debt. That's about half the outstanding mortgages in the United States.

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truthhurts Jul 14 2008 13:22:14
This thread discusses the Content article: Feds show plans to save Fannie and Freddie

And the spiral continues. The government has no choice but to bail them out. If not, it could lead to a real global crisis. Just another example of failed Republican economic policies.

Tax cuts for the wealthy and supply side economics? Checked the deficit lately? How about the dollar in the dumper?

Dismantling government regulation of business? Can you say mortgage crisis? Bank failures, not to mention rampant speculation in the oil futures markets, where a barrel of oil can change hands five, six, seven times before it ever gets to a refinery, going up in price each time.

The chickens of the Reagan "get government off the backs of business" era are coming home to roost. They always do.
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RogerWilco Jul 14 2008 18:31:24
truthhurts wrote:
This thread discusses the Content article: Feds show plans to save Fannie and Freddie

And the spiral continues. The government has no choice but to bail them out. If not, it could lead to a real global crisis.

The federal government most certainly does have a choice. It can choose to let economic principles play out, painful as it may be. Bush is proposing BUYING SHARES to prop up prices. A very, very bad idea.

When corporate boards, officers and investors make mistakes, they should be held acccountable. The taxpayer should not. There are a lot of people who chose not to put their money at high risk, chose homes they could afford and chose low risk standard mortgages. People who played fast and loose with their money should not get bailed out. People who played fast and loose with other people's money should be put in jail.

Dismantling government regulation of business? Can you say mortgage crisis?

It started with Greenspan's mantra of loose monetary policy. He believed the neocon principles that we can spend our way out of anything. Guess he's wrong.
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