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| Version 0 | Version 1 |
|---|---|
| US 'mulls bail-out for lenders' | US 'mulls bail-out for lenders' |
| (about 4 hours later) | |
| The US government is reported to be considering injecting up to $15bn (£7.5bn) into the providers of mortgage funding Freddie Mac and Fannie Mae. | The US government is reported to be considering injecting up to $15bn (£7.5bn) into the providers of mortgage funding Freddie Mac and Fannie Mae. |
| The extra capital could be announced before the US markets open on Monday, according to the London-based Sunday Times and Sunday Telegraph newspapers. | The extra capital could be announced before the US markets open on Monday, according to the London-based Sunday Times and Sunday Telegraph newspapers. |
| Freddie Mac and Fannie Mae guarantee almost half of all US home loans. | Freddie Mac and Fannie Mae guarantee almost half of all US home loans. |
| Their share prices fell nearly 50% last week amid fears that they might have trouble raising money. | Their share prices fell nearly 50% last week amid fears that they might have trouble raising money. |
| Freddie Mac and Fannie Mae are known as government-sponsored enterprises (GSE) and they buy debt from the companies that sell mortgages to house-buyers. | Freddie Mac and Fannie Mae are known as government-sponsored enterprises (GSE) and they buy debt from the companies that sell mortgages to house-buyers. |
| They then sell on the debt to investors and because they are government sponsored, the price of mortgages is kept low. | They then sell on the debt to investors and because they are government sponsored, the price of mortgages is kept low. |
| If investors decided to stop buying the debt from the two companies it would mean they would have to stop supporting the housing market and the already tough situation would get even worse. | If investors decided to stop buying the debt from the two companies it would mean they would have to stop supporting the housing market and the already tough situation would get even worse. |
| Nationalisation rumours | Nationalisation rumours |
| On Friday US Treasury Secretary Henry Paulson was forced to issue a statement saying that he would support the two GSEs "in their current form" to dispel rumours of nationalisation. | On Friday US Treasury Secretary Henry Paulson was forced to issue a statement saying that he would support the two GSEs "in their current form" to dispel rumours of nationalisation. |
| Under the plan reportedly being considered, the US government would receive special shares in Fannie Mae and Freddie Mac, which would further reduce the already depressed value of the existing shareholders' stakes. | Under the plan reportedly being considered, the US government would receive special shares in Fannie Mae and Freddie Mac, which would further reduce the already depressed value of the existing shareholders' stakes. |
| Mr Paulson is insisting that if there is to be a rescue then it must not benefit shareholders, the Wall Street Journal reported on Saturday. | Mr Paulson is insisting that if there is to be a rescue then it must not benefit shareholders, the Wall Street Journal reported on Saturday. |
| Freddie Mac is due to sell $3bn in short-term debt on Monday, which may hasten the government's decision. | Freddie Mac is due to sell $3bn in short-term debt on Monday, which may hasten the government's decision. |
| It is important for the sale to be a success to show confidence in the GSEs. | |
| Treasury Department officials have been on the phone over the weekend making sure that banks that would normally buy such such debt from Freddie Mac are planning to bid this time, according to the Washington Post. | |
| The newspaper reports that the officials are now optimistic about the sale. | |
| Obama comments | |
| The Democratic White House hopeful Barack Obama has made his first comments about the problems facing the GSEs. | The Democratic White House hopeful Barack Obama has made his first comments about the problems facing the GSEs. |
| He described the situation as being of "extraordinary concern", but did not support an immediate bail-out. | He described the situation as being of "extraordinary concern", but did not support an immediate bail-out. |
| "I think we need to watch carefully and see how it plays out before we make a decision about which steps need to be taken, if any," he told reporters on a flight to San Diego. | "I think we need to watch carefully and see how it plays out before we make a decision about which steps need to be taken, if any," he told reporters on a flight to San Diego. |
| "I have confidence that with some prudent steps by the government, that we'll be able to stabilise the situation." |