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What Our Presidential Candidates Feel About "The Takeover"

By
Real Estate Agent with Sedona Elite Properties Management, Inc.

 

The government (Treasury, at this point), will receive warrants representing ownership stakes of 79.9 percent in each company, and is hoping that its moves will reassure nervous investors that they can continue to buy the debt of the two companies.  The Treasury in turn will, also, purchase the GSEs' mortgage-backed securities until December 2009.

Shortly after the announcement of the newly formed conservatorship, Democratic presidential nominee Barack Obama issued a statement agreeing that some form of intervention was necessary, and promised, "I will be reviewing the details of the Treasury plan and monitoring its impact to determine whether it achieves the key benchmarks I believe are necessary to address this crisis."

Republican presidential nominee John McCain also voiced support while his running mate, Alaska Gov. Sarah Palin, said that Fannie and Freddie "have gotten too big and too expensive to the taxpayers. The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help."

The conservatorship will be run by the Federal Housing Finance Agency, the new agency created by Congress this summer to regulate Fannie and Freddie, a move taken at the same time that Congress greatly expanded the power of the Treasury Department to make loans to the two companies and purchase their stock.

The executives and board of directors of both institutions are being replaced. Herb Allison, the former head of the TIAA-CREF retirement investment fund, was selected to head Fannie Mae, and David Moffett, a former vice chairman of US Bancorp, was picked to head Freddie Mac.

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