To The Rescue
From Slate’s daily email, one of my favorite news sources:
To the Rescue
By Daniel Politi
Posted Monday, July 14, 2008, at 7:00 AM ET
The New York Times, Washington Post, and Los Angeles Times lead with the federal government announcing a proposal, which each of the papers describes as “sweeping,” to bolster the troubled mortgage giants Fannie Mae and Freddie Mac. Bush administration officials said they would ask Congress to temporarily increase the amount of money the Treasury Department can lend to the institutions as well as allow the government to invest directly in either company “if needed.” Although the Treasury didn’t specify the size of its package, the NYT gets word that lawmakers will be asked to consider increasing the line of credit to the institutions that is currently set at $2.25 billion each to $300 billion total. In addition, the Federal Reserve announced that it would allow Freddie and Fannie to borrow directly from the central bank for the first time. The move would effectively give the mortgage giants access to the Fed’s discount window, a privilege that was extended to Wall Street’s biggest investment banks earlier this year. The NYT hears that the Fed’s decision is temporary and would “probably” only last until Congress passes the Treasury proposal.
By Daniel Politi
Posted Monday, July 14, 2008, at 7:00 AM ET
The New York Times, Washington Post, and Los Angeles Times lead with the federal government announcing a proposal, which each of the papers describes as “sweeping,” to bolster the troubled mortgage giants Fannie Mae and Freddie Mac. Bush administration officials said they would ask Congress to temporarily increase the amount of money the Treasury Department can lend to the institutions as well as allow the government to invest directly in either company “if needed.” Although the Treasury didn’t specify the size of its package, the NYT gets word that lawmakers will be asked to consider increasing the line of credit to the institutions that is currently set at $2.25 billion each to $300 billion total. In addition, the Federal Reserve announced that it would allow Freddie and Fannie to borrow directly from the central bank for the first time. The move would effectively give the mortgage giants access to the Fed’s discount window, a privilege that was extended to Wall Street’s biggest investment banks earlier this year. The NYT hears that the Fed’s decision is temporary and would “probably” only last until Congress passes the Treasury proposal.
More details later.
Yes, let’s increase funding to a quasi-government institution that had a gearing ratio of 60:1.
-bsmup
Well written article.