Were used to prop up bad loans and bail out Morgan Stanley and all their friends.
from FEBRUARY
http://www.usatoday.com/money/companies/earnings/2008-02-27-fannie_N.htmFannie Mae (FNM) and Freddie Mac (FRE) could have billions of dollars more to finance home purchases after the government on Wednesday on the amount of mortgages the government-sponsored companies can hold on their books.
The restrictions were lifted despite Fannie Mae's staggering quarterly loss of $3.6 billion as defaults and foreclosures surged. The company also warned there could be a "significant" worsening in the real estate market.
Fannie Mae and smaller rival Freddie Mac have lobbied their regulator to lift the restrictions on their combined $1.4 trillion portfolios to give them the ability to buy more mortgages from lenders and support housing.
The caps were imposed in 2006 in response to the government-sponsored mortgage companies' multibillion-dollar accounting lapses, thereby limiting their participation in the market for securities backed by home mortgages.
Fannie Mae's chief executive said the company will be conservative in using its capital to buy loans as it wants to limit losses.