Treasury to provide as much capital as Fannie, Freddie need

Market Watch:

TEL AVIV (MarketWatch) -- The U.S. Treasury agreed to provide Fannie Mae and Freddie Mac with as much capital as they need over the next three years, in an effort to reassure the investors who bought the giant mortgage companies' debt, The Wall Street Journal reported.

Late on Thursday, the Treasury also said that it would stop buying the companies' mortgage-backed securities and end a short-term-liquidity facility set up for both companies and for the Federal Home Loan Banks. That facility was never drawn upon, the Journal reported.

And the Treasury Department said that Fannie Mae (FNM 1.05, 0.00, 0.00%) and Freddie Mac (FRE 1.27, +0.01, +0.79%) could reduce their giant mortgage-securities portfolios more slowly than its previous requirement of 10% a year.

The Treasury moved when it did because its authority to change the terms of its agreements with the two companies without Congress's approval expires Dec. 31, the Journal reported.

And I know that much of the media is focused on how much money the Obama Administration is pouring into Fannie and Freddie which will anger people. But, keep in mind that Fannie and Freddie has always been a government entity lending institution. The government can let Fannie and Freddie go. In my opinion, the government should let go AIG since AIG is not a bank but a company with various components which should be broken up. Here was Fannie's stock as of 12/24: $1.05. Freddie's stock is : $1.26.

Read more on Fannie and Freddie's stock. Click here.

On a side note: How is Goldman Sachs doing in stock?:$163.97