US Government To Bail Out Fannie Mae and Freddie Mac

It has been reported that the US Government is about to bail out Fannie Mae and Freddie Mac, the giants of the American mortgage industry.

This is a highly controversial use of taxpayer's money, but the collapse of the sub prime mortgage market has cost them billions of dollars. Between them these two colossuses are behind about half of all US mortgages, and have considerable impact on the US economy as a whole.

In the UK it seems that similar moves are afoot. Apparently the British Government have commissioned the Crosby report that could lead to billions of pounds of tax payers money being made available to mortgage lenders. It is not clear how this will operate, as the report is a recent undertaking. However, there are suggestions that the British Chancellor is now studying the report, so some form of decision may be imminent.

The British Government have already moved to support their own ailing mortgage market, but on nothing like the scale now being considered both sides of the Atlantic. Of course the UK authorities have already bailed out the troubled Northern Rock mortgage bank to the tune of a reported £40 billion. These are difficult times and there are still uncertain and contentious issues to deal with. Those countries, whose economies are not so reliant on what happens in housing markets, seem better able to weather the current storms.

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Fannie Mae and Freddie Mac
Fannie Mae and Freddie Mac