Concerns over the future of America's two federal mortgage lenders heightened after it emerged the US government has held behind-the-scenes talks over what to do should they collapse.
The Bush administration is understood to have stepped up conversations in recent weeks on what to do if Fannie Mae or Freddie Mac falter, with US Treasury secretary Hank Paulson leading the contingency planning.
Although neither Fannie nor Freddie provide mortgages to individuals, they are the linchpin of the US mortgage market, providing liquidity to lenders by guaranteeing $5,000bn (£2,500bn) of mortgages, equivalent to almost half of the US mortgage market.
They were set up in 1968 and 1970 respectively to provide stability and liquidity to the housing market, and are known as GSEs - government-sponsored enterprises - but are not backed or funded by the US government.
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1 comment:
Fannie Mae and Freddie Mack could set the US Treasury back about 5 Trillion dollars, even with the 10 Trillion dollar debt we have already. Paulson is so funny he has no idea what he's doing or saying. He and Bennie will surely put the US in the poor house. Paulson joined the team to get money for his new Business now he's looking like the idiot he is. Bennie has to call his professor before he give a press conference to get the answers and not look like the fool he is.
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