In a move that could cost taxpayers billions, the Associated Press is reporting the government is expected to take over Fannie Mae and Freddie Mac in a effort designed to protect the mortgage market from the failure of the two companies, which together hold or guarantee half of the nation’s mortgage debt.
Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and James Lockhart, the companies’ chief regulator, met Friday afternoon with the top executives from the mortgage companies and informed them of the government’s plan to put the troubled companies into a conservatorship.
Source: Associated Press
I find it interesting this news was announced following the conclusion of the Republican National Convention where delegates, candidates, and Republican politicians just “don’t get it”. Or, perhaps, they do get it, but just don’t want to talk about it.
In related news, regulators on Friday shut down Silver State Bank, saying the Nevada bank failed because of losses on soured loans, mainly in commercial real estate and land development. It was the 11th failure this year of a federally insured bank. The FDIC estimated its resolution will cost the deposit insurance fund between $450 million and $550 million.
The Associated Press is also reporting that Andrew K. McCain, a son of Republican presidential nominee John McCain, sat on the boards of Silver State Bank and of its parent, Silver State Bancorp, starting in February but resigned in July citing “personal reasons,” corporate filings with the Securities and Exchange Commission show. Andrew McCain also was a member of the bank’s audit committee, responsible for oversight of the company’s accounting.