U.S. Reaffirms Backing of Fannie, Freddie Stock

Wall Street Journal (09/12/08) P. A5; Randall, Maya Jackson
A recent statement from the Treasury Department insists it will uphold its stock-purchase agreement with Fannie Mae and Freddie Mac, indicating that Congress or the executive branch will be unable to alter the agreement down the road. In exchange for agreeing to offer up to $200 billion in capital to the companies as necessary, the department was given $1 billion in preferred shares from each firm and warrants to buy nearly 80 percent of their common stock. To inject capital to maintain solvency, the Treasury says it would boost the value of shares it currently holds, rather than buy new stock.