WASHINGTON (AFP) — The US government is considering a plan to take over mortgage giants Fannie Mae and Freddie Mac if their finance problems deepen, US media reported on Friday.
Citing people briefed on the plan, the New York Times said the administration of President George W. Bush was weighing the possibility of having to place one or both companies in a conservatorship to protect them from the snowballing collapse of the US mortgage finance market.
"The officials involved in the discussions stressed that no action by the administration was imminent, and that Fannie and Freddie are not considered to be in a crisis situation," the Times reported.
However, it said that the two companies, by far the largest home loan financers in the United States with 5.2 trillion in mortgages or mortgage guarantees on their books, faced weakening balance sheets as their stocks plummet and their borrowing costs sour in the face of doubts about their health.
The Times said that an alternative intervention strategy, having the government guarantee the five trillion dollars of debt the two companies own or themselves guarantee, was seen as less attractive, because it would have the effect of doubling US public debt.
