US

Treasury announces measures to aid mortgage companies

Article published on the 2008-07-14 Latest update 2008-07-14 12:33 TU

US Treasury Secretary Henry Paulson announces aid measures
(Credit: Reuters)

The two biggest US mortgage finanace companies, Fannie Mae and Freddie Mac, were given an emergency lifeline by the US Treasury on Monday in an effort to head off an even greater natioinwide financial crisis in the United States. The Treasury Department will have temporary authority to buy shares. Freddie Mac is scheduled to sell three billion dollars in short-term notes on Monday.

US Treasury Secretary Henry Paulson announced a plan to rescue the two big mortgage companies and has presented it to Congress.  

The Treasury will get temporary authority to buy shares from the two companies as deemed necassary. Freddie Mac is scheduled to sell three billion dollars in short-term notes on Monday.

Freddie Mac and Fannie Mae own or guarantee almost half of all US home loans, about five trillion dollars (three trillion euros) of debt.

It is not yet clear whether these share purchases would be made on the public stockmarket, or whether the Treasury would be giving money outright to the two companies.

The Board of Governors of the Federal Reserve System announced that it had granted the Federal Reserve Bank of New York the authority to lend to Freddie Mac and Fannie Mae. This move is meant to supplement the Treasury emergency measures.