Bush defends rescue of mortgage lenders

July 15th, 2008 - 11:27 pm ICT by IANS  

Washington, July 15 (DPA) US President George W. Bush Tuesday defended his administration’s decision to bail out troubled mortgage firms Fannie Mae and Freddie Mac and sought to assure Americans their bank accounts are safe. Bush said the government acted to protect the two financial institutions because they are vital to the economy. Fannie Mae and Freddie Mac finance or buy half of all home mortgages - estimated at a total of $12 trillion.

“A lot of people in the country probably don’t understand how important they are to the mortgage markets,” Bush said at a White House press conference.

“And it’s really important for people to have confidence in the mortgage markets and that there be stability in the mortgage markets.”

Bush urged Americans to keep their money in bank accounts because their deposits are backed by the federal government in the event a bank collapses.

“My hope is that people take a deep breath and realize that their deposits are protected by our government,” Bush said.

Two years into the ongoing downturn in US home prices, the two firms saw their already hard-hit share prices plummet by half again last week, amid growing fears on Wall Street that the federal housing lenders were in financial trouble.

Financial shares on Wall Street suffered their largest drop in trading Monday, further diminishing confidence in the market.

On Friday, US federal regulators seized the assets of California mortgage bank IndyMac - the largest US bank crash since the fall of the Continental Illinois National Bank in 1984.

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