WASHINGTON -- Seeking to avoid even further damage to an already battered housing market, the government on Sunday took control of Fannie Mae and Freddie Mac.
The move, which includes both a promise of capital to avoid Fannie and Freddie going broke and replacing the top executives of the two government sponsored enterprises, comes in the wake of $14.9 billion dollar losses by both during the past year. The Treasury Department will receive $80 billion of preferred stock in the companies and agree to infuse up to $100 billion in capital in each company.
Fannie and Freddie together own about $500 trillion --or one half--of the mortgage market.
CUNA President/CEO Dan Mica and NAFCU President/CEO Fred Becker both said the government's action was needed to help the housing market and calm the nerves of consumers.
"Although we continue to review the details of the plan, CUNA agrees with Fed Chairman Bernanke that the necessary steps taken by the Federal Housing Finance Administration, and the Treasury, help to strengthen the U.S. housing market and promote stability in our financial markets--thus reassuring consumers," Mica said in a statement.
Becker's statement praised the efforts of the government officials who announced the plan and said it "is imperative that Fannie Mae and Freddie Mac have access to the capital they need to sustain the U.S. mortgage market at this time of uncertainty in the financial markets."
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