What kind of help has Fannie Mae already gotten, and why might it need more?
When the government took over Fannie Mae in September, the Treasury Department committed to providing the mortgage finance giant with up to $100 billion of cash in exchange for preferred stock. So far, Fannie hasn’t tapped these funds yet, according to the Treasury, but it warns that it will need access to this money — and much, much more — if it becomes insolvent. The company’s financial position has deteriorated along with the economy, creating a bleaker outlook than when the government first took over Fannie two months ago. “There were holes in their balance sheet that we did not know the dimensions of,” says Vincent Reinhart, resident scholar at the American Enterprise Institute. On Monday we learned that the Treasury Department agreed to restructure AIG’s assistance package. What’s different? The new assistance program for AIG involves dipping into the $700 billion bailout plan that Congress approved. Previously, only banks and financial services companies were eligible for a shar
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