Sunday, 7 September 2008

Fannie Mae and Freddie Mac

The US government is taking over the two troubled mortgage companies Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac, are government-chartered, shareholder-owned firms that provide liquidity to the housing market, have been whipsawed by the financial meltdown in the past year, losing some 90 percent of their value on fears of losses from mortgage defaults.

A law enacted last July, gives the US government the authority to buy shares or offer liquidity to the companies to keep them afloat, averting what some fear could be a major shock to an already fragile global financial system.

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