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December 2, 2008 8:06:20 PM CST



Feds Outline Fannie, Freddie Bailout

Posted Sep 7, 08 11:28 AM CDT in US Business 

(Newser) – Citing Fannie Mae and Freddie Mac as "critical to turning the corner on housing," Treasury Secretary Henry Paulson this morning announced a bailout of the beleaguered mortgage companies that includes his agency purchasing preferred stock, while the Federal Housing Finance Agency will step in as conservator. Additionally, Treasury is to buy mortgage-backed securities in the open market, and provide a lending facility, the Wall Street Journal reports.

While acknowledging inherent taxpayer risk in acquiring significant stakes in Freddie and Fannie, Paulson emphasized "the ultimate cost to the taxpayer will depend on the business results... To that end, the steps we have taken ... will improve the housing market, US economy, and GSEs' business outlook." Federal control over day-to-day operations has no set end point.

Source Wall Street Journal

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Fannie Mae President and Chief Executive Officer Daniel Mudd will be departing as part of the bailout deal laid out by the Treasury Department and FHFA.   (AP Photo/Manuel Balce Ceneta, file)
Federal Reserve Chairman Ben Bernanke made a statement today in support of the Treasury Department and FHFA's takeover of Freddie Mac and Fannie Mae.   (AP Photo/Susan Walsh)
Treasury Secretary Henry Paulson, Jr. speaks during a news conference in Washington, Sunday, Sept. 7, 2008 on the bailout of mortgage giants Fannie Mae and Freddie Mac.   (AP Photo/Susan Walsh)
Treasury Secretary Henry Paulson, Jr., left, and Federal Housing Finance Agency Director James Lockhart, right, exchanges places during their news conference in Washington, Sunday, Sept. 7, 2008 on the...   (AP Photo/Susan Walsh)
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I also welcome the introduction of the Treasury's new purchase facility for mortgage-backed securities, which will provide critical support for mortgage markets in this period of unusual credit-market uncertainty. - Fed Chairman Ben Bernanke

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