Freddie and Fannie failed to get the message

Bangkok News.Net
Saturday 6th September, 2008

It has been suggested that mortgage giants Fannie Mae and Freddie Mac failed to heed warnings about the worst housing bubble in US history.

The companies were not able to withstand the severe downturn in US home prices.

Economists who long warned the US housing boom could not last are concerned that the companies were not better prepared for what they saw as an inevitable downturn.

On Friday, the Mortgage Bankers Association said that more than 4 million American homeowners with a mortgage, a record 9 percent, were either behind on their payments or in foreclosure at the end of June.

Treasury Secretary Henry Paulson has been in contact in recent weeks with foreign governments that hold billions of dollars of Fannie and Freddie debt to reassure them that the United States intends upholding the integrity of the two companies.

An historic government takeover of the two companies was announced on Sunday.

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