Fannie and Freddie get Senate boost

28 July 2008

Controversial plans to lend unlimited amounts to government-sponsored mortgage firms Fannie Mae and Freddie Mac have been passed by the US Senate.

The proposals, originally announced by Treasury secretary Henry Paulson following a loss of market confidence in the lenders two weeks ago, should now safeguard the future of the organisations.

Around $300 billion in loans will now be guaranteed - helping to alleviate the pressure on the US housing market.

Connecticut Democrat Christopher Dodd, principle author of the housing bill, commented: "This legislation won't perform miracles. But as others have said, it's a step - and I hope an important step - to putting our nation on the road to economic recovery."

However, Iowa Republican Charles Grassley, R-Iowa sounded a note of caution - pointing out that the rescue plan might not represent good value for money.

"This bill has fallen prey to the special interests on Wall Street and K Street at an unjustifiable expense to taxpayers and homeowners on Main Street," he said.

Collectively, Fannie and Freddie hold over 50 per cent of total US mortgage debt - guaranteeing between them around $2.5 trillion.

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