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