U.S BAILS OUT LENDER PAIR AFTER BILLIONS OF LOSSES; Biggest financial rescue deal ever.
THE US last night took over failing mortgage giants Freddie Mac and Fannie Mae to save them from collapse.
The two, which account for EUR5.3trillion (pounds 3trillion) or nearly half of all US mortgages, have lost EUR14billion in the housing crash. The federal takeover is the largest bail-out in US history. Management will be replaced while the firms will be given access to funding to prevent bankruptcy as borrowers default on loans. About nine per cent of homeowners are failing on loans or face repossession. The US Treasury's Henry Paulson said: "Fannie Mae and Freddie Mac are so large and interwoven that a failure would create turmoil in world markets."
He said the two firms' debt levels posed a "systemic risk".
The Treasury's funding will last until 2009 with neither allowed to pay shareholders.
EUR5,300,000,000,000 of mortgage debt is owed to Freddie Mac and Fannie Mae - half of all US house lending
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|Publication:||The Mirror (London, England)|
|Date:||Sep 8, 2008|
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