Federal Government Seizes Control of Fannie Mae and Freddie Mac
On late Friday, the news media became abuzz with reports, the shoe had finally began to drop with regard to Fannie Mae and Freddie Mac. Articles revealing the government had conjured a plan to put the two troubled mortgage Goliaths under federal control, dismiss their top executives, while shoring the institutions up financially.
The plan would prompt one of the more sweeping government interventions of financial markets in U.S. history, placing the firms under conservatorship, and empowering the government to restructure and breath new life into the companies.
Stock would be significantly devalued, but not wiped out. The capital infusion would not be provided all at once, but could be made in quarterly installments, as Freddie and Fannie’s losses warrant.
The news media today announced more concretely, the federal government seizure of Fannie Mae and Freddie Mac. Some potential estimates place the cost of the bailout in the range of $200 billion.
Many financial experts are cautiously saying they believe it will likely help reverse a prolonged housing and credit crisis. However, some analysts worry that it may be too little too late when it addresses the slumping housing market given the glut of vacant homes for sale, and rising foreclosures.
Both presidential candidates, appear to be supporting this historic move. There is a detailed article available on MSNBC, as well as other news media. The link to the MSNBC report follows here:
Written for GreatWest GMAC
by: Myrl Jeffcoat
Related Links: www.msnbc.msn.com/id/26591359
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