Breaking Reports: Fannie Mae, Freddie Mac Takeover Set (MSNBC)

Created by : Airlight View profile

Collapse

Top execs would be dismissed and common stock diluted under federal plan

The federal government has prepared a plan to take control of troubled mortgage giants Fannie Mae and Freddie Mac, several news outlets reported Friday night.

The Washington Post reported on its Web site that government officials had told the two companies that their top executives would be dismissed and government funds used to prop them up.

Quoting unidentified sources, the Post said that the companies would be placed under a conservatorship and that the value of the companies' common stock would be diluted but not wiped out, while other securities, including preferred shares, would be protected by the government.

The Post and the Wall Street Journal reported that any infusion of capital would be done quarter by quarter. The Post said that was being done in an attempt to minimize the initial cost of the rescue.