After the Dow suffered losses last week based on worries surrounding Fannie Mae and Freddie Mac, Treasury Secretary David Paulson offered plans to help today. Obviously, the intent is to keep the losses from skyrocketing higher tomorrow when the stock market opens. Also tomorrow, Freddie Mac has a scheduled 3 billion debt sale.
The shares of these two companies created by Congress to guarantee and hold home mortgages had plummeted 75% for the year. Together, they own or back 5 trillion in home mortgages.
Paulson announced the firms can go to the Federal Reserve for funds and the Bush administration plans to send a proposal to Congress. The proposal would allow the Treasury to buy stock in the companies and allow them a higher line of credit with the Treasury. Read more here.
This comes on the heels of Fridays's action by the Federal Office of Thrift Supervision who seized the bank, IndyMac, one of the largest holders of home mortgages. Control was transferred to FDIC and the Bank will reopen tomorrow. Read more here.
Let's see if this calms investors tomorrow. Stay Tuned.
Sunday, July 13, 2008
Plan to Save Fannie Mae and Freddie Mac Proposed
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