Government considers takeovers of Freddie, Fannie
- July 11, 2008
The U.S. government is discussing a plan to take over one or both of the nation’s largest mortgage finance companies if their financials worsen further, according to a report in the New York Times on Friday.
McLean-based Freddie Mac and Washington, D.C.-based Fannie Mae have lost billions in the subprime collapse. Unnamed officials told the Times that the discussions only involve contingency plans, and the companies were not currently in a crisis situation.
Freddie and Fannie shares have dropped sharply as financials have worsened and the New York Times article came out. Shares of Fannie were down 50 percent in Friday’s pre-market trading to $6.50. Freddie’s shares were also down 50 percent, to $4.05.
Under the administration’s plan, the companies would be placed in conservatorship, meaning shares would have little value and taxpayers would be responsible on losses on home loans they own or guarantee.