Fannie Mae and Freddie Mac's Current Financial Crisis
The administration has proposed a rescue package for mortgage giants Fannie Mae and Freddie Mac after shares dropped alarmingly in the stock market.
Mortgage giants Fannie Mae and Freddie Mac are presently undergoing a tough time. With confidence level and shares going down significantly for the past week, some people think that a government bailout is about to happen.
Fannie had a 28 percent drop in shares, while Freddie slid 26 percent. The loss in value now totals to 80 percent since the start of the year. It’s alarming how -two financial institutions holding half of the country’s mortgages are starting to crumble in the midst of the housing crisis. Failure in both government-sponsored enterprises (GSEs) could have a devastating effect not only here in the United Stated but in other countries as well.
Foreign governments own money used in both companies’ operations. Investors, companies, mutual and pension funds abroad also have money utilized by Fannie and Freddie.
To prevent further damage, the government came up with measures to help Fannie and Freddie get billions of dollars in the form of a "rescue package". The rescue package aims to buy the company stocks using public money. Aside from that, the Federal Reserve will allow both companies to borrow money at a special rate, and would make one of its short-term lending programs available. Aside from that, the administration is seeking the Federal Reserve’s permission to let Fannie and Freddie secure liquidity.
The Federal Reserve is closely working with the Congress and Treasury to try and put these rescue measures into effect. The Treasury is also seeking to stretch the credit line for both institutions to $300 billion, and buy equity directly from both GSEs to prevent liquidity problems in the future.
The rescue plan was put into effect after close monitoring of both Fannie and Freddie. The government immediately sought precautionary steps to ensure that both mortgage giants have enough money to stay afloat.
MortagesForEveryone.com < http://www.mortgages-for-everyone.com > is a site that aims to provide information about mortgage-related concerns like refinancing your home, interest rates, using your home equity, down payments, home improvement loans, and many others.
Article source: http://www.mortgages-for-everyone.com/news/plummeting-shares-and-confidence-in-mortgage-giants-prompts-rescue-plan/
Fannie had a 28 percent drop in shares, while Freddie slid 26 percent. The loss in value now totals to 80 percent since the start of the year. It’s alarming how -two financial institutions holding half of the country’s mortgages are starting to crumble in the midst of the housing crisis. Failure in both government-sponsored enterprises (GSEs) could have a devastating effect not only here in the United Stated but in other countries as well.
Foreign governments own money used in both companies’ operations. Investors, companies, mutual and pension funds abroad also have money utilized by Fannie and Freddie.
To prevent further damage, the government came up with measures to help Fannie and Freddie get billions of dollars in the form of a "rescue package". The rescue package aims to buy the company stocks using public money. Aside from that, the Federal Reserve will allow both companies to borrow money at a special rate, and would make one of its short-term lending programs available. Aside from that, the administration is seeking the Federal Reserve’s permission to let Fannie and Freddie secure liquidity.
The Federal Reserve is closely working with the Congress and Treasury to try and put these rescue measures into effect. The Treasury is also seeking to stretch the credit line for both institutions to $300 billion, and buy equity directly from both GSEs to prevent liquidity problems in the future.
The rescue plan was put into effect after close monitoring of both Fannie and Freddie. The government immediately sought precautionary steps to ensure that both mortgage giants have enough money to stay afloat.
MortagesForEveryone.com < http://www.mortgages-for-everyone.com > is a site that aims to provide information about mortgage-related concerns like refinancing your home, interest rates, using your home equity, down payments, home improvement loans, and many others.
Article source: http://www.mortgages-for-everyone.com/news/plummeting-shares-and-confidence-in-mortgage-giants-prompts-rescue-plan/
Use the feedback form below to submit your comments.
Use the form below to email this article to your friends.
- US Economy: Financial Group Suggests Reforms for Banking Industry
- Signs of Recovery in Us Economy
- US Economy Boosted By Rise in Manufacturing Orders
- Spending Slowdown Hits Us Economy
- US Economy Grows Less Than Expected
- Surging Us Economy Leads Global Recovery
- Sluggish growth for US economy
- Redundancies rise as US economy stalls
- Bush Appoints Rail Chief to Put Us Economy Back on Track
- US Economy: Americans Back Off Bottled Water But Still Spend Money on Mcdonald's
- US Economy: Yahoo's Profits Dip 19% As Firms Cut Back on Internet Ads
- US Economy: Apple Shares Drop in Unofficial Trading
- US Economy: Lacklustre Google and Microsoft Results Puncture Wall Street's Fragile Good Cheer
- US Economy: Investigators Target Home Loans at Failed California Bank
- US Economy: Bernanke Describes Economic Woes at Congressional Hearing
- US Economy: Online Auctioneer Ebay Victorious in Us Counterfeit Case
- World Still Dependent on Us Economy, Says Bush Adviser
- Gloomy Greenspan Warns of Recession for Us Economy
- Opec Cut Puts Us Economy at Risk, Says White House
- Greenspan Insists Us Economy is Strong
- Obama Urges Spending to "Create Jobs" and Stimulate Economy
- Second Wave of the Housing Crisis
- H-1B Visa Program Spirals Downwards
- US Economy Grows
- Recession Declared Officially Over, Unemployment Still Rising
- Biden Cheers Economic Stimulus, But Ignores Facts in the Process
- Consumer Sentiment Rises More than Expected
- Cash for Refrigerators is Next Stimulus Program Set to Launch
- Huge Increase in July Home Sales Signals More Optimism for Economy
- Recession Fighting Back in July, New Recovery Concerns for Economy
- Leading Indicator Shows Recession May Soon End
- Large Swath of the Country Left Untouched by Recession
- U.S. Bailouts Reach $4.7 Trillion, No End in Sight
- U.S. Budget Deficit Moves Over $1 Trillion, First Time Ever
- Obama Administration Restricts Executive Pay