Consumer Law

"U.S. promises unlimited financial assistance to Fannie Mae, Freddie Mac"

By M. Stan Herring

The Washington Post.com has posted an article about the Obama administration's pledge to provide "unlimited financial assistance to mortgage giants Fannie Mae and Freddie Mac, an eleventh-hour move that allows the government to exceed the current $400 billion cap on emergency aid without seeking permission from a bailout-weary Congress."

This means that the Treasury Department can basically run the companies as government branches for the rest of Obama's term. However, as this decision was being made, Fannie Mae and Freddie Mac's executives said they received approval to pay $42 million in "Wall Street style compensation" to their top 12 executives for 2009. Combined, the companies have already received $111 billion in assistance.

Treasury said Thursday that its decision did not mean the firms would need $200 billion or more apiece, but that it instead was seeking to assure markets that the government would stand behind the companies. In a statement, Treasury said the move "should leave no uncertainty about the Treasury's commitment to support these firms as they continue to play a vital role in the housing market during this current crisis."

Although the Obama administration has broadened to oversee these companies, it's possible mortgage-assistance programs will be cut back while executives of Fannie Mae and Freddie Mac will receive a base salary of $900,000 as well as various bonuses.

If you have concerns or questions about how this will affect you, feel free to contact us by calling 205-879-2447.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Full post as published by Alabama Consumer Blog on January 04, 2010 (boomark / email).