Freddie Mac: Difference between revisions

On September 7, 2008, [[Federal Housing Finance Agency]] (FHFA) director [[James B. Lockhart III]] announced he had put Fannie Mae and Freddie Mac under the [[conservatorship]] of the FHFA (see [[Federal takeover of Fannie Mae and Freddie Mac]]). The action has been described as "one of the most sweeping government interventions in private financial markets in decades".<ref name="ofheo.gov">{{cite news |first=James B. |last=Lockhart III |title=Statement of FHFA Director James B. Lockhart |url=http://www.ofheo.gov/newsroom.aspx?ID=456&q1=0&q2=0 |publisher=Federal Housing Finance Agency |date=September 7, 2008 |access-date=September 7, 2008 |url-status=dead |archive-url=https://web.archive.org/web/20080912172510/http://www.ofheo.gov/newsroom.aspx?ID=456&q1=0&q2=0 |archive-date=September 12, 2008}}</ref><ref name='FHFA-Conservatorship-2008-09-07'>{{cite news |title=Fact Sheet: Questions and Answers on Conservatorship |date=September 7, 2008 |publisher=Federal Housing Finance Agency |url=http://www.ofheo.gov/media/PDF/FHFACONSERVQA.pdf |access-date=September 7, 2008 |url-status=dead |archive-url=https://web.archive.org/web/20080909183946/http://www.ofheo.gov/media/PDF/FHFACONSERVQA.pdf |archive-date=September 9, 2008}}</ref><ref name='Washington Post-Goldfarb, Cho & Appelbaum-2008-09-07'>{{cite news |first=Zachary A. |last=Goldfarb |author2=David Cho |author3=Binyamin Appelbaum |title=Treasury to Rescue Fannie and Freddie: Regulators Seek to Keep Firms' Troubles From Setting Off Wave of Bank Failures |date=September 7, 2008 |url=https://www.washingtonpost.com/wp-dyn/content/article/2008/09/06/AR2008090602540.html |newspaper=[[The Washington Post]] |pages=A01 |access-date=September 7, 2008}}</ref> As of the start of the conservatorship, the [[United States Department of the Treasury]] had contracted to acquire US$1 billion in Freddie Mac senior preferred stock, paying at a rate of 10% per year, and the total investment may subsequently rise to as much as US$100 billion.<ref>{{cite news |last=Christie |first=Rebecca |title=Paulson Engineers U.S. Takeover of Fannie, Freddie (Update4)|url=https://www.bloomberg.com/apps/news?pid=20601087&sid=ajcw4yxxPGJ8 |date=September 7, 2008 |publisher=Bloomberg |access-date=September 7, 2008}}</ref> Shares of Freddie Mac stock, however, plummeted to about one [[U.S. dollar]] on September 8, 2008, and dropped a further 50% on June 16, 2010, when the stocks delisted due to falling below minimum share prices for the NYSE.<ref>{{cite news |author=Adler, Lynn |title=Fannie Mae, Freddie Mac to delist shares on NYSE |url=https://www.reuters.com/article/idUSTRE65F3GR20100616 |date=June 16, 2010 |publisher=Reuters |access-date=June 16, 2010}}</ref> In 2008, the yield on [[United States Treasury security|U.S Treasury securities]] rose in anticipation of increased U.S. federal debt.<ref>{{cite news |author1=Grynbaum, Michael |author2=Jolly, David |title=U.S. Takeover of Mortgage Giants Lifts Stock Markets |url=https://www.nytimes.com/2008/09/09/business/worldbusiness/09markets.html |date=September 8, 2008 |work=[[The New York Times]] |access-date=September 8, 2008}}</ref> The housing market and economy eventually recovered, making Freddie Mac profitable once again.