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Treasury near GSE bailout plan: report

by : Reuters

Date : Fri, 05 Sep 2008 21:23:39 GMT





WASHINGTON (Reuters) - The U.S. Treasury Department is close to finalizing a plan to buttress mortgage finance companies Fannie Mae lt;FNM.Nand Freddie Mac lt;FRE.N gt;, the Wall Street Journal reported on Friday.Citing people familiar with the matter, the Journal said the plan was expected to involve a creative use of authority the Treasury won in late July to pump capital into the two government-sponsored enterprises if it believed it was necessary.The report said the plan, which could be announced as early as this weekend, includes changes to senior management at both companies.Treasury spokeswoman Brookly McLaughlin declined to comment on the report. Fannie Mae and Freddie Mac also declined to comment.An emergency plan approved by Congress in late July gave Treasury the authority to offer an undetermined amount of credit to the two companies, or take an equity stake in them if they ran into trouble.The two companies own or guarantee almost half of the country 's $12 trillion in outstanding home mortgage debt.Earlier, McLaughlin had told Reuters the department was "making progress on our work " with Morgan Stanley, the Federal Housing Finance Agency, which regulates the two companies, and the U.S. Federal Reserve.The Treasury had hired Morgan Stanley on August 5 to advise it on whether the companies were adequately capitalized and help it determine how it would use its news powers to support them if needed.(Reporting by Glenn Somerville; writing by Tim Ahmann, Editing by Chizu Nomiyama) lt;br gt;(c) Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.



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