U.S. Government Considers Takeover of Two Mortgage Giants:NY Times

U.S. Government Considers Takeover of Two Mortgage Giants:NY Times

www.nytimes.com

WASHINGTON — Alarmed by the growing financial stress at the nation’s two largest mortgage finance companies, senior Bush administration officials are considering a plan to have the government take over one or both of the companies and place them in a conservatorship if their problems worsen, people briefed about the plan said on Thursday.

The companies, Fannie Mae and Freddie Mac, have been hit hard by the mortgage foreclosure crisis.

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Am I reading this correctly? The Gov is going to take over and place these companies under conservatorship, which will in turn leave the bill of these folks losses on we, the tax-payers? So more bailout of the lenders, directly by the gov, and we are footing the bill for it?

Under a conservatorship, the shares of Fannie and Freddie would be worth little or nothing, and any losses on mortgages they own or guarantee — which could be staggering — would be paid by taxpayers.

The government officials said that the administration had also considered calling for legislation that would offer an explicit government guarantee on the $5 trillion of debt owned or guaranteed by the companies. But that is a far less attractive option, they said, because it would effectively double the size of the public debt.

www.nytimes.com
(visit the link for the full news article)

Beat ya by four minutes here.

I'm glad to see someone else caught this quick though it's very important.

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