Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben
Bernanke on Sunday indicated the federal government will shore up
mortgage intermediaries
Fannie Mae and Freddie Mac, both of which have
been ravaged by the housing collapse and subprime mortgage crisis.
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Paulson issued a statement saying the Treasury will extend its line of credit to the two companies and may even take an equity stake in them if necessary. The Treasury also wants to amend legislation before Congress overseeing government-sponsored enterprises, or GSEs, so the Federal Reserve will have a consultative role in the regulation of the two organizations.
The Federal Reserve followed with its own statement, saying it would allow the Federal Reserve Bank of New York to lend to the two companies if needed.
The announcements Sunday are the latest chapter in the story of the troubles at the Federal National Mortgage Association, known as Fannie Mae, and Federal Home Loan Mortgage Corp., called Freddie Mac, and that is just the latest volume in the seemingly endless saga of the housing and mortgage crisis. Fannie and Freddie -- which are sponsored by the government but owned by shareholders -- package and market residential mortgages into securities, but the market for those securities have tanked as the mortgage crisis deepened.
The news came only two days after the Federal Deposit Insurance Corp. seized IndyMac Bancorp of Pasadena, Calif., the largest mortgage lender to collapse in the current crisis. -
Peter MoreiraSee full story on
TheDeal.com
