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Fed steps in over Fannie Mae and Freddie Mac

  • 08/09/2008
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The US federal Government has taken control of Fannie Mae and Freddie Mac in a bid to keep the two mortgage giants from failing.

The two US government-backed companies own or hold about half of the country’s mortgage debt, roughly $5.4tn.

The takeover follows the federal government’s bailout of investment bank JPMorgan Chase in a move backed by the Federal Reserve Bank.

Regulators set up a conservatorship to provide stability to financial markets, support the availability of mortgage finance, and protect taxpayers.

The companies – which saw a combined $3.1bn loss from April to June – will open as normal and will be allowed to expand their mortgage-backed securities, about $20bn a month without any constraints.

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