Summary of the Current State of Fannie Mae and Freddie Mac (NCRC) - September 9, 2008

On September 7, 2008, the U.S. Secretary of the Treasury, Henry Paulson, together with the Director of the Federal Housing Finance Agency (FHFA), James Lockhart, released a statement announcing the decision of Lockhart to place the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac under conservatorship. The Housing and Economic Recovery Act of 2008, signed into law on July 30, 2008, enabled expanded regulatory authority over the GSEs by the newly established FHFA and gave the Treasury the authority to advance funds for the purpose of stabilizing Fannie Mae and Freddie Mac. Since that time, the Treasury, Federal Reserve and FHFA have monitored the financial market, analyzed the current financial conditions of the GSEs and determined that it was necessary to take action.

A statement by Paulson outlines three additional steps that will be taken by the Treasury to complement the FHFA’s decision to place both GSEs in conservatorship. Together with the conservatorship, these additional steps are a direct result of collaboration between the Treasury, Federal Reserve and FHFA.

Please click here for a full PDF of the statement.