US Treasury moves to help troubled housing lendersJuly 14th, 2008 - 8:44 am ICT by IANS
Washington, July 14 (DPA) The US government moved to aid the troubled lenders that shore up the nation’s struggling home mortgage market, after crisis talks Sunday in Washington. The two firms, nicknamed Fannie Mae and Freddie Mac, financed or bought about half of all mortgages, which are estimated at $12 trillion in the US.
Two years into the ongoing downturn in US home prices, the two firms saw their already hard-hit stock values plummet by half again last week, amid growing Wall Street fears that the federal housing lenders were in financial trouble.
The moves being led by Treasury Secretary Henry Paulson will amount to a guarantee of Fannie’s and Freddie’s debts, in a move to shore up confidence in their survival.
Fannie Mae and Freddie Mac are chartered by the federal government, but their shares are publicly traded.
The mortgage debt owned or guaranteed by the two companies has never been explicitly backed by the US government. But private investments have always shown an assumption on Wall Street that Fannie and Freddie would be bailed out by taxpayers in the event of looming failure.
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