The U.S. government on Sunday seized control of mortgage finance companies Fannie Mae and Freddie Mac , launching what could be its biggest bailout ever in a bid to support the U.S. housing market and ward off more global financial market turbulence.
The action, prompted by worries over the companies' shrinking capital, was the latest in a series of emergency steps taken by U.S. officials to prop up the wobbly housing sector and quell what is now a year-long crisis in credit markets that has helped push many economies toward recession.
"Our economy and our markets will not recover until the bulk of this housing correction is behind us," U.S. Treasury Secretary Henry Paulson said in a statement read to reporters.
Fannie Mae and Freddie Mac, which own or guarantee almost half of the country's $12 trillion (6.7 trillion pounds) in outstanding home mortgage debt, were so large that "a failure of either of them would cause great turmoil in our financial markets here at home and around the globe," Paulson said.
READ FULL ARTICLE AT: http://www.iht.com/articles/reuters/2008/09/07/business/OUKBS-UK-FANNIE-FREDDIE.php
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