Gov’t Sets New Bailout Terms for Fannie, Freddie
Gov’t Sets New Bailout Terms for Fannie, Freddie
The Treasury Department announced tweaks to a bailout agreement with Fannie Mae and Freddie Mac that sets out to decrease the mortgage giants’ holdings faster and speed up repayment of taxpayer bailout money given to the companies.
Under the new agreement, the mortgage giants will be required to pay the government any and all of their profits each quarter. They will also be required to reduce their mortgage holdings. The Treasury will cap the companies’ holdings at $250 billion by 2018--that marks four years earlier than originally slated. Also, the companies’ portfolios can be no larger than $650 billion by the end of the year.
"With today's announcement, we are taking the next step toward responsibly winding down Fannie Mae and Freddie Mac while continuing to support the necessary process of repair and recovery of the housing market," says Michael Stegman, a counselor on housing policy for the Treasury Secretary.
The government took over Fannie and Freddie in September 2008 during the financial crisis. The Treasury has provided nearly $188 billion in support to Fannie Mae and Freddie Mac since then.
Source: “Treasury Changes Fannie and Freddie Bailout Deal,” The Associated Press (Aug. 17, 2012)
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