Fears Grow Over Mortgage Giants

PlusFears Grow Over Mortgage GiantsFears Grow Over Mortgage GiantsThe Associated PressStocks of Fannie Mae and Freddie Mac are hammered as the housing slump spreads, but the Bush administration says it's not planning a federal takeover of the mortgage giants. (July 11)It's the latest shock-wave from the housing crisis: fears that mortgage giants Fannie Mae and Freddie Mac could go belly-up.Shares in the two government-sponsored mortgage companies have been hammered ... [Notes:Bush helo/wave from today's departure]...and their future's being debated by President Bush and his top advisers. BUSH SOT: Freddie Mac and Fannie Mae are very important institutions. We spent a fair amount of time discussing these institutions. [Notes:More file Fannie/Freddie]But administration officials insist they're NOT readying a federal takeover. [Notes:To Paulson on the Hill]Treasury Secretary Henry Paulson says right now, HE thinks the two just need better oversight -- and do NOT need more cash.PAULSON SOT: "We have a situation here where the regulator, the independent regulator said there's adequate capital." FONT: Treasury Secretary Henry Paulson [Notes:File Wall Street, then more housing file]But those words have NOT reassured investors, who seem convinced that as big as they are, Fannie Mae and Freddie Mac could be swamped by more bad loans.Who are these two? The Federal National Mortgage Association and Home Loan Mortgage Corporation were chartered by Congress to make home loans cheaper and easier to get for average Americans. ZIBEL SOT: "WHAT THE TWO COMPANIES DO IS THEY BUY MORTGAGES, YOUR ORDINARY HOME LOANS, AND PACKAGE THEM INTO INVESTMENTS THAT INVESTMENTS BUY AROUND THE WORLD. AND THEY'RE PERCEIVED AS VERY LOW RISK INVESTMENTS UNTIL RECENTLY." FONT: Alan Zibel, AP Business Writer [Notes:More file housing slump]Between them the two hold or guarantee some $5 trillion in loans. Failure by either could be disastrous -- but a federal takeover would NOT be a cure-all. ZIBEL SOT: "The fear is that their ability to buy home loans would be reduced and the availability of home loans would decrease. I think the government is going to do everything it can to prevent that." [Notes:Standup close]Right now, with regular banks under siege, the administration's depending on Fannie and Freddie to keep cranking out those mortgages. Anything that makes them write fewer or more expensive loans -- would be the LAST thing the embattled housing market needs.MS, The Associated Press, the White House

Channel: News & Politics
Uploaded: July 11, 2008 at 8:55 pm
Author: AssociatedPress

Length: 02:00
Rating: 3.50
Views: 1660

Tags: fannie  fears  giants  grow  mae_freddie_mac  mortgage  

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