WASHINGTON – July 18, 2008 – Treasury officials and senior lawmakers huddled behind closed doors yesterday, searching for a way the Treasury Department might safely invest in mortgage finance giants Fannie Mae and Freddie Mac without exposing taxpayers to massive losses.
People close to the talks said Treasury Secretary Henry M. Paulson Jr., House Financial Services Committee Chairman Barney Frank (D-Mass.), and leaders of the Senate Banking Committee are considering a plan that would allow the government to buy senior preferred shares in Fannie Mae and Freddie Mac if the firms’ financial condition were to deteriorate dramatically. That would mean taxpayers would get any payouts before other shareholders when the firms returned to financial health, the sources said. The rest of the story...
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