Fannie And Freddie's 15-Month Fix
Maurna Desmond
It's been described as one of the largest government bailouts in U.S. history, but Treasury Secretary Henry Paulson's four-pronged rescue of Fannie Mae and Freddie Mac is merely a temporary solution, leaving a cloudy view on what the two mortgage giants will look like in the future.
The government seized the mortgage finance companies over the weekend in the form of a conservatorship, promising to buy the companies' preferred stock, buy mortgage-backed securities from their portfolios and provide a lending facility. What Paulson did not say: whether these companies will be permanently nationalized.
Instead, the plan calls for the run-off of their portfolios of mortgage-backed securities starting in 2010, which is a little more than 15 months away. That is about as much time the next Congress would need to come up with a permanent fix. More
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