Industry NewsMortgage

Fannie, Freddie don’t plan to borrow from feds

Paulson speaks to Senate about GSEs' challenges

A government plan to extend a line of credit to Fannie Mae and Freddie Mac and buy stock in the companies if needed was not prompted by any sudden deterioration in Fannie's or Freddie's bottom lines, and neither company has immediate plans to borrow from the government, Treasury Secretary Henry Paulson told Senate lawmakers today. Speaking before the Senate Banking Committee, Paulson asked lawmakers to give the Treasury Department the authority it needs to carry out a three-part plan, which he said was "aimed at supporting the stability of financial markets, not just these two enterprises." Debt and other securities issued by the government-sponsored entities, or GSEs, "are held by financial institutions around the world," Paulson said. "Continued confidence in the GSEs is important to maintaining financial system and market stability." The GSEs are purchasing or guaranteeing 70 percent of new mortgages, and "represent the only functioni...