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...shareholders have already lost billions of dollars as the stocks have plunged more than 80 percent this year.
For months, administration officials have grappled with the steady erosion of the books of the two mortgage finance giants, created during the Depression and converted to public companies in the 1960s.
A fierce behind-the-scenes debate among policy makers has been waged over whether to seize the companies or let them work out their problems. Even after the companies are put under government control, debates will continue over whether they should be independent and how they should operate over the long term.
The government-sponsored mortgage giants Fannie Mae and Freddie Mac, which together hold or guarantee nearly half of the country's $12 trillion in mortgages.
Originally posted by jefwane
I can see the national debt rising 25-50% basically overnight.
The National Debt has continued to increase an average of $1.93 billion per day since September 28, 2007
U.S. nears rescue plan for Fannie and Freddie
The government has formulated a plan to put troubled mortgage giants Fannie Mae and Freddie Mac under federal control, dismiss their top executives and prop them up financially, federal officials told the two companies yesterday, according to three sources familiar with the conversations.
The proposal to place both companies, which own or back $5.3 trillion in mortgages, into a government-run conservatorship also grew out of deep concern among foreign investors that the companies’ debt might not be repaid.
Then, last week, advisers from Morgan Stanley hired by the Treasury Department to scrutinize the companies came to a troubling conclusion: Freddie Mac’s capital position was worse than initially imagined, according to people briefed on those findings
Allowing the companies to fail or further deteriorate would damage our home mortgage market, and could weaken other credit markets that are unrelated directly to housing," Bush said in a statement released Sunday afternoon.
Treasury Secretary Henry Paulson said the actions were being taken because the failure of either of the mortgage companies "would cause great turmoil in our financial markets here at home and around the globe."
The huge potential liabilities facing each company could cost taxpayers tens of billions of dollars. But Paulson stressed that the financial impacts if the two companies had been allowed to fail would be far more serious.
Funny ... lots of people knew that years ago ... freaking moron.
Bush said the federal regulator for Fannie Mae and Freddie Mac determined they could no longer operate safely and conduct their public mission. He said that posed "an unacceptable risk to the broader financial system and our economy."