Bernanke upbeat on Fannie and Freddie

17 July 2008

The US congress was strongly urged to adopt rescue measures for Fannie Mae and Freddie Mac as soon as possible.

Following meetings in Washington DC yesterday, treasury secretary Henry Paulson indicated that the package - which guarantees unlimited financial backup for the beleaguered lenders - could be passed as soon as next week.

The government and the Federal Reserve have looked to make the measures law following a plunge in Fannie and Freddie's shares last week - with rumor suggesting that both giant lenders faced a liquidity crisis.

"I am optimistic that this is going to be done quickly," Mr Paulson commented.

Senator Christopher Dodd, a Connecticut Democrat, added that he had some concerns over the potential financial ramifications of the plan, however.

"I want to make darn sure that, if we do this, that the American taxpayer is going to be protected," he commented.

Collectively, Fannie and Freddie hold around $5 trillion of mortgage debt - over half of the total US market.

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