The US Treasury and Federal Reserve have unveiled a wide-ranging programme to bolster troubled mortgage giants Fannie Mae and Freddie Mac.
The plan includes extending unprecedented support to the companies and proposing new authority to lend them money and even buy their stock.
“As you know Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder owned companies. Their support for the housing market is particularly important as we work through the current housing correction.” said Treasury Secretary Henry Paulson.
Officials are desperate to calm nerves ahead of a crucial debt issue by Freddie Mac later today. The move comes after regulators seized mortgage lender IndyMac Bancorp on Friday, in the third-largest bank failure in U.S. history.