US rescue of Fannie, Freddie poses taxpayer risks

By TOM RAUM

WASHINGTON (AP) — President Bush's "ownership society" was never supposed to come to this.

With the government takeover of Fannie Mae and Freddie Mac, U.S. taxpayers now essentially own the bulk of the nation's mortgage market.

This ownership could even lead to a big increase in the national debt — to $15 trillion, up from just under $10 trillion now — if things don't work out as planned.

The government's forced rescue of the mortgage finance giants over the weekend could have many unintended consequences, even though those in both parties — including the presidential nominees, Republican John McCain and Democrat Barack Obama — have greeted it as a necessary evil toward easing the nation's housing and credit woes.

If all goes as planned, it should help make home loans cheaper and more readily available. It also may slow the rate of foreclosures and possibly halt house price depreciation. But that's a big maybe.

US rescue of Fannie, Freddie poses taxpayer risks....

Fannie, Freddie: Plunge then rebound

By Chris Isidore, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) -- Shares of mortgage finance giants Fannie Mae and Freddie Mac plunged and then came back on Thursday after new reports that the federal government may have to take over the troubled firms.

Fannie fell as much as 87 cents or 20%, to $3.53, but then rebounded to a 10.2% gain by the end of the session. Freddie shares tumbled as much as 99 cents, or 30%, to a record low before rebounding to a 2.8% loss. The lows of the day represented a 20-year low for Fannie (FNM, Fortune 500) when adjusted for splits, and a record low on that basis for Freddie (FRE, Fortune 500), which started trading in 1989.

Fannie, Freddie: Plunge then rebound....

Treasury Acts to Save Mortgage Giants

By STEPHEN LABATON

WASHINGTON — Alarmed by the sharply eroding confidence in the nation’s two largest mortgage finance companies, the Bush administration on Sunday asked Congress to approve a sweeping rescue package that would give officials the power to inject billions of federal dollars into the beleaguered companies through investments and loans.

In a separate announcement, the Federal Reserve said that it would make one of its short-term lending programs available to the two companies, Fannie Mae and Freddie Mac. The Fed said that it had made its decision “to promote the availability of home mortgage credit during a period of stress in financial markets.”

An official said the Fed’s decision to permit the companies to borrow from its so-called discount window was approved at the request of the Treasury, but that it was temporary and would probably end once Congress approved Treasury’s plan. Some officials briefed on the plan said Congress could be asked to extend the total line of credit to the institutions to $300 billion.

Treasury Acts to Save Mortgage Giants....

Fannie, Freddie Tumble on Bailout Concern, UBS Cut

By Dawn Kopecki and Shannon D. Harrington

July 10 (Bloomberg) -- Fannie Mae and Freddie Mac, the two biggest providers of financing for U.S. home loans, fell to the lowest levels in 17 years in New York trading after a former Federal Reserve president said the companies may need a government rescue.

Fannie Mae tumbled as much as 24 percent and Freddie Mac slumped as much as 34 percent in New York Stock Exchange composite trading after UBS AG analysts said in a report today that Freddie Mac's decline creates ``challenges'' for the company's plan to raise $5.5 billion.

Chances are increasing that the U.S. will bail out Fannie Mae and Freddie Mac because they don't have enough capital to weather the worst housing slump since the Great Depression, former St. Louis Federal Reserve President William Poole said in an interview. Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules. The fair value of Fannie Mae assets fell 66 percent to $12.2 billion, data provided by the Washington- based company show, and may be negative next quarter, Poole said.

Fannie, Freddie Tumble on Bailout Concern, UBS Cut....