MarketWatch: Treasury set to bail out Fannie Mae, Freddie Mac in one of biggest govt. rescues

[marmar]

Treasury set to bail out Fannie Mae, Freddie Mac
By Greg Morcroft, MarketWatch


SAN FRANCISCO (MarketWatch) -- The Treasury Department is expected to announce as early as this weekend a plan to bail out and recapitalize collapsing home mortgage giants Fannie Mae and Freddie Mac in one of the biggest government rescues in U.S. history.

Such a plan would end a long downward spiral for the firms, which the government created to help expand home ownership and provide a secondary market for home loans.

Rep. Barney Frank (D.-Mass.) confirmed in a statement Saturday that Treasury Secretary Henry Paulson is set to put the federal government in control of the two troubled mortgage owners. But Frank, who is chairman of the House Financial Services Committee, said he had no details on the intervention plan. Officials at the Treasury Dept. could not be reached for comment.

According to media reports citing unnamed sources close to the negotiations, the government is expected to take at least temporary control of Fannie Mae and Freddie Mac and place the troubled firms under the umbrella of the Federal Housing Finance Agency.

Fannie Mae Chief Executive Daniel Mudd and Freddie Mac CEO Richard Syron are expected to leave their positions soon after the federal bailout is complete.

The boards of both companies reportedly were to meet today to review the proposals.

Under the terms of the proposal, the government would make periodic injections of funds by buying either convertible preferred shares or warrants in the two companies as needed, as opposed to a large, up-front cost, according to reports citing people briefed on the plans. ......(more)

The complete piece is at: http://www.marketwatch.com/news/story/treasury-set-bail-out-fannie/story.aspx?guid=%7B46D1439E%2DA2C4%2D418C%2D9BE0%2D09BE0B9EE60D%7D

[bahrbearian]

1. China told US too.