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Turmoil over Fannie Mae and Freddie Mac

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Turmoil over Fannie Mae and Freddie Mac

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The US government is considering taking over mortgage finance companies Fannie Mae and Freddie Mac if their funding problems worsen. That is according to a report in the New York Times which said such a plan could leave their shareholders with nothing.

Responding, US Treasury Secretary Henry Paulson said his department’s chief aim is to back Fannie Mae and Freddie Mac in their “current form.” Investors’ initial reaction was to view Paulson’s statement as an indication that a bailout of the two companies is not imminent but still possible.