Government to seize control of Freddie Mac and Fannie Mae
In a stunning announcement, executives of both Fannie Mae and Freddie Mac were told that their companies are on the verge of government seizure and forced conservatorship.
The executive leadership and their respective boards were also informed they stand to be replaced if this happens. Should this announcement become reality, it bodes poorly for shareholders leaving their holdings virtually worthless. Yet, the companies will continue operations with the government backing their debt.
The companies have been ineffective raising new capital leaving the government little choice but to takeover. With the presidential election approximately 8 weeks away, sooner was better than later according to the administration.
This is an alarming turn. Yes the have been unprecedented challenges in the financial markets but to see two of the country’s largest institutions brought low leaves a person to ponder.
Fannie, Freddie to be seizedGovernment’s plan a bailout, officials say
Senior officials from the Bush administration and the Federal Reserve on Friday informed top executives of mortgage finance giants Fannie Mae and Freddie Mac that the government was preparing to seize the two companies and place them in a conservatorship, officials and company executives briefed on the discussions said.
Fannie and Freddie to be seized, officials say | Business | Chron.com - Houston Chronicle
