US spells out Fannie-Freddie backstop plan

[Zorro]

Source: AP

The Federal Reserve and the Treasury announced steps Sunday to shore up mortgage giants Fannie Mae and Freddie Mac, whose shares have plunged as losses from their mortgage holdings threatened their financial survival.

The steps are also intended to send a signal to nervous investors worldwide that the government is prepared to take all necessary steps to prevent the credit market troubles that started last year with losses from subprime mortgages from engulfing financial markets and further weakening the economy and housing markets.

The Fed said it granted the Federal Reserve Bank of New York authority to lend to the two companies "should such lending prove necessary." They would pay 2.25 percent for any borrowed funds — the same rate given to commercial banks and Big Wall Street firms.

The Fed said this should help the companies' ability to "promote the availability of home mortgage credit during a period of stress in financial markets."

Read more: http://news.yahoo.com/s/ap/20080713/ap_on_bi_ge/mortgage_giants_crisis

[Demeter]

1. Regulatory Reform Is Off the Table, Then?

Because why fix the barn door if the horses are dead already?

[RantinRavin]

2. No, regulatory reform will not correct the immediate.

making the funds available will make sure they don't go completely belly-up before reforms can take effect.

[rfranklin]

3. Buying stock with worthless IOUs? There is no money in the...

Treasury piggy bank. They are doing everything possible to throw this country into a full-blown depression.

On sconde thought, it probably doesn't matter but this will pump the stock market up so the big boys can keep selling before the total collapse.

[Maggie_May]

4. Why can't we borrrow money for 2.25%

Why can't I tell my creditors that I need to raise capital and I need my mortgage or credit cards at 2.25%. We will bail out wall street and won't help consumers who are in trouble. This getting to be a huge joke wall streets gets what ever they want and when they want it.

[northernlights]

5. it's intended to shore up the stock market

but I'm not convinced it will. Next week will tell.

In the past, anything bush did to shore up the market tended to just increase investor fears. Last week they were nervous because they think there's a problem. Now bush has admitted there's a problem. So now they *know* it's as bad as they feared...if not worse.

[Tutonic]

6. What in the Hell does this really mean?

"promote the availability of home mortgage credit during a period of stress in financial markets." Why doesn't the "Fed" just say "they're broke"..."and now they're gonna feed at the teet."

[ShockediSay]

7. I'll bet it's not of the people, by the people and for the people nt

[lakeguy]

8. it's by the people...

for the fat cats.