Talks on Mortgage Giants Continue

Washington Post (07/18/08) P. D3; Birnbaum, Jeffery H.; Montgomery, Lori
The Bush administration and top lawmakers are negotiating ways to protect taxpayers once Fannie Mae and Freddie Mac rebound financially. Debate on the proposal to rescue them centers on allowing the government to purchase senior preferred shares in the mortgage finance giants, which would enable taxpayers to be paid before other shareholders. House Financial Services Committee Chairman Barney Frank, D-Mass, wants to postpone dividend payments to shareholders, but the idea would force divestiture by major financial investors that have to invest in stocks that pay dividends. Also, Treasury Secretary Henry Paulson Jr. wants to exempt the investment in Fannie Mae and Freddie Mac from the nation's debt limit; but lawmakers have rejected the idea.