WRAPUP 5-U.S. seizes Fannie, Freddie, aims to calm markets
September 8th, 2008 | by admin |* U.S. government takes over Fannie Mae, Freddie Mac
* Move is aggressive bid to help battered housing market
* Regulator to operate companies; CEOs replaced
* U.S. stock futures soar on move (Updates with financial market reaction, paragraphs 5-6;HKMA’s Yam, paragraph 10)
By Glenn Somerville
WASHINGTON, Sept 7 (Reuters) - The U.S. government onSunday seized control of mortgage finance companies Fannie Mae(FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz), launching what could be itsbiggest bailout ever in a bid to support the U.S. housingmarket and ward off more global financial market turbulence.
The action, prompted by worries over the companies’shrinking capital, was the latest in a series of emergencysteps taken by U.S. officials to prop up the wobbly housingsector and quell what is now a year-long crisis in creditmarkets that has helped push many economies toward recession.
“Our economy and our markets will not recover until thebulk of this housing correction is behind us,” U.S. TreasurySecretary Henry Paulson said in a statement read to reporters.
Fannie Mae and Freddie Mac, which own or guarantee almosthalf of the country’s $12 trillion in outstanding home mortgagedebt, were so large that “a failure of either of them wouldcause great turmoil in our financial markets here at home andaround the globe,” Paulson said.
