Daily Archives: 2008/09/07

Federal Government Takes Over 5 Trillion Mortgage Giants

Treasury Secretary Henry Paulson said¬†¬†“Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe.”

The companies own or guarantee about $5 trillion in home loans, about half the nation’s total. The huge potential liabilities facing each company, as a result of soaring mortgage defaults, could cost taxpayers tens of billions of dollars.

Fannie and Freddie investors have been stripped of any governance rights – Shares in the mortgage giants, which have already lost 90% of their value over the past year, are likely to plunge Monday. Black Monday.

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