U.S. Unveils Plan to Aid Mortgage Giants

Washington Post (07/14/08) P. A1; Irwin, Neil; Birnbaum, Jeffrey H.
The Bush administration has outlined a plan to help Fannie Mae and Freddie Mac weather investor concerns about capitalization and expects the measures to be passed by Congress and signed into law by the president by the end of next week. Under the plan, the government-sponsored enterprises would be able to trade certain assets for cash at the Federal Reserve's discount window in the event of an emergency. Additionally, the Treasury secretary would be given authority to boost Fannie Mae and Freddie Mac's $2.25 billion credit lines as necessary and negotiate terms under which the government would purchase their stock. According to Treasury Secretary Henry Paulson, "Use of either the line of credit or the equity investment would carry terms and conditions necessary to protect the taxpayer."