Market Update 7/14/2008

By
Mortgage and Lending with CYPRESS MORTGAGE

Treasury Secretary Henry Paulson put the weight of the federal government behind

Fannie Mae and Freddie Mac, the beleaguered companies that buy or finance almost

half of the $12 trillion of U.S. mortgages. Paulson, speaking on the steps of the

Treasury facing the White House, asked Congress for authority to buy unlimited stakes

in and lend to the companies, aiming to stem a collapse in confidence. The Federal

Reserve separately authorized the firms to borrow directly from the central bank.

Fannie and Freddie shares surged in Frankfurt trading. The steps would bring the U.S.

closer to giving an explicit guarantee for the debt sold by the shareholder-owned,

federally chartered companies. That reflects a need for the government to bail out an

economy that's been rocked by the worst housing recession in 25 years, the credit

crisis, and soaring energy costs. The announcements followed weekend talks between

the firms, government officials, lawmakers and regulators, after Fannie Mae and

Freddie Mac lost about half their value last week. The market is .25 better in discount

this morning.

Comments (0)