Bailout! Feds step in to help Fannie and Freddie
Last night, U.S. Treasury secretary unveiled a plan to aid struggling mortgage financiers Fannie Mae and Freddie Mac, both of which have taken a recent pummeling on Wall Street amid rising capitalization concerns.
The government-sponsored enterprises, deemed too important to fail, are the focus of a three-pronged strategy aimed at addressing the immediate liquidity and capital needs, as well as ensuring the firm’s solvency going forward.
First: Fannie and Freddie will be granted a temporary increase in the lines of credit they hold with the Treasury department. Currently each is able to borrow $2.25 billion directly from the Fed.
Second, the Treasury will ...