Treasury mulls over Freddie and Fanny rescue
AMERICAN authorities were said last night to be working on plans to prop up crisis-hit mortgage lenders Freddie Mac and Fannie Mae.
One option under consideration by US Treasury secretary Hank Paulson is to inject up to $15billion (£7.5billion) into the the nation’s biggest home loan providers.
Such a move would give the federal government a massive stake in the companies but Paulson scotched speculation about nationalisation.
Another alternative is for the US government to offer them 10-year loans on favourable terms.
Shares in both companies plunged as much as 50 per cent on Friday, prompting them to stress their balance sheets were strong.
A key test of sentiment comes today when Freddie Mac is due to renew $3billion of funding.
The US Treasury is said to have contacted banks to ensure this succeeds but the government could be forced to buy or guarantee the securities.