US takes over Fannie, Freddie in bid to ease finance crisis

Sri Lanka's Prime Minister Ranil Wickremesinghe arrives with flowers to receive blessings at the Gangaramaya Buddhist Temple, Colombo, Sri Lanka on Wednesday 4 April 2018. On wednesday (4), Wickremesinghe survived a no-confidence motion in the Sri Lankan parliament with a 46 vote majority after a 12-hour debate with 122 MPs voted in his support while 76 MPs voting to remove the prime minister. (Photo by Tharaka Basnayaka/NurPhoto via Getty Images)

WASHINGTON, September 7, 2008 (AFP) – The US government took over ailing mortgage giants Fannie Mae and Freddie Mac on Sunday and placed them in a “conservatorship” in a bid to avert a financial system meltdown from the housing crisis.

Treasury Secretary Henry Paulson announced the US regulator was seizing control of the government-chartered, shareholder-owned firms which underpin trillions of dollars of home loans and a have an enormous global financial footprint.

The move constitutes a massive government intervention to contain the damage from the worst housing slump in decades, which has rippled through the banking system and led to multibillion-dollar losses for Fannie and Freddie.

“Americans should be confident that the actions taken today will strengthen our ability to weather the housing correction, and are critical to returning the economy to stronger sustained growth in the future,” President George W. Bush said in a statement.

He stressed that the move was a temporary, “near term” intervention, but said a financial system meltdown from the potential failure of Freddie Mac and Fannie Mae posed “an unacceptable risk” to the US economy.

Paulson said the plan “is the best means of protecting our markets an