What role does the US Treasury have in supporting Freddie Mac and Fannie Mae?
The US Department of Treasury agreed to purchase as much senior preferred stock in the Agencies as necessary to maintain positive net worth, up to a maximum of $100 billion per company. In exchange for committing to purchase the shares, Treasury will receive warrants to purchase approximately 80% of each company and $1 billion in senior preferred stock. Also, the Treasury established a liquidity facility for the Agencies (and the Federal Home Loan Bank) called the GSECF, which will ensure continued funding.
