Only time will tell if this is true.

Federal Reserve Chairman Ben Bernanke stood before the House Financial Services Committee today and assured Congress that Fannie Mae and Freddie Mac are in "no danger of failing" and that they are "adequately capitalized."

Bernanke said that a lack of investor confidence in the housing market led to the GSE's inability to raise capital which caused investors to get the jitters, stock prices to plunge, and the Fed to step in.

The intention of the Fed's plan to rescue Fannie and Freddie, if necessary, was merely meant to send a message to the financial community, the industry, and consumers - assuring us all that the government would see to it that Fannie and Freddie would not fail...because they cannot fail.  Fannie and Freddie own or back more than half the mortgage debt in the U.S. which amounts to more than $5 trillion.  Their survival is crucial to not only the U.S. housing market, but to the nation's overall economy.

The emergency rescue plan involves 1.) the Administration asking Congress to pass legislation that would extend lines of credit on a temporary basis over the current billion $2.25 limit from the Treasury to Fannie and Freddie; 2.) giving the Treasury the option to buy equity in Fannie and Freddie; and 3.) granting the Federal Reserve Bank of New York the authority to lend additional funds to the GSEs.

Both Fannie and Freddie were quick to say the plans are just a precaution.  "We continue to hold more than adequate capital reserves and maintain access to liquidity from the capital markets," said Daniel H. Mudd, President and CEO of Fannie Mae. "Given the market turmoil, having options to access provisional sources of liquidity if needed will help to strengthen overall confidence in the market."

Richard F. Syron, Chairman and CEO of Freddie Mac shared Mudd's sentiment, "The company (Freddie Mac) is adequately capitalized, has a large liquidity portfolio and access to the world's debt markets. The company's capital and liquidity resources will enable it to continue to serve its public mission as it has always done."