Government bail-out for US mortgage giants FannyMae and FreddyMac

06 September 2008

Mumbai: The US government is preparing to take over control of the country's two largest mortgage finance companies, Fannie Mae and Freddie Mac, as other measures to stabilise the two have failed, the New York Times reported citing company officials.

The government will dismiss the boards of the two mortgage companies and  appoint a new receiver in their place ahead of launching the revival plan, the report said.

The receiver, meanwhile, is reported to have summoned chief executives of the two companies to the regulator's office and told that they and their boards would be replaced.

While under the government's revival package, the two companies would be placed under the administrative control of a government-appointed receiver, the report said.

Shareholders in the two companies would lose most of their investment, with taxpayers carrying any remaining guaranteed worth.

Fannie Mae had, in August, reported a second quarter loss of $2.3 billion, the fourth straight loss in as many quarters. The company recorded a $1.86 billion gain in the same period a year ago.