US takes control over Freddie Mac and Fannie Mae
07 September 2008
The US Government seizes control of mortgage giants Fannie Mae and Freddie Mac. US Treasury placed Freddie Mac and Fannie Mae under conservatorship of the Federal Housing Finance Agency.
The US Government seizes control of mortgage giants Fannie Mae and Freddie Mac. US Treasury placed Freddie Mac and Fannie Mae under conservatorship of the Federal Housing Finance Agency
"Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe”, Treasury Secretary Henry Pauson said.
The U.S. Treasury, the FHFA, and the Federal Reserve agreed on a four steps plan which includes that:
- GSEs will modestly increase their MBS portfolios through the end of 2009. Then, to address systemic risk, in 2010 their portfolios will begin to be gradually reduced at the rate of 10 percent per year;
- Treasury and FHFA have established Preferred Stock Purchase Agreements, contractual agreements between the Treasury and the conserved entities;
- Treasury is also establishing a new secured lending credit facility which will be available to Fannie Mae, Freddie Mac, and the Federal Home Loan Banks;
- Treasury is initiating a temporary program to purchase GSE MBS
Joint press release
Statement Paulson
Statement Bernanke
© US Treasury
