Washington Seeks Rescue of Freddie and Fannie
White House asks Congress to approve package
By Dustin Lushing,  Newser Staff
Posted Jul 13, 2008 5:48 PM CDT
Freddie Mac Corporate Office are seen Sunday, July 13, 2008 in McLean, Va.   (AP Photo)
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(Newser) – After a frenzied week that saw Fannie Mae and Freddie Mac teeter near collapse, the US Treasury and Federal Reserve are seeking to save the nation's two largest mortgage finance companies. Officials say that the plan, if approved by Congress, will let the government buy billions of dollars in Freddie and Fannie stock and lend them money to cover short-term needs, the New York Times reports.

The plan also call for the US to raise its debt limit, and the Fed to demand that Freddie and Fannie keep a safe capital cushion. Expected to be announced tonight, the move aims to soothe fears that the two companies, which hold or guarantee more than $5 trillion in US mortgages, would collapse, inflicting catastrophic damage on the nation's financial system.