WASHINGTON, D.C. — Federal officials on Sunday unveiled a takeover plan for Fannie Mae and Freddie Mac, putting the government in charge of the mortgage giants and the $5 trillion in home loans they back.
U.S. Treasury Secretary Henry Paulson said it was difficult to know the ultimate cost of the Treasury’s takeover, but he insisted taxpayers be repaid before shareholders.
“It’s very difficult for anyone to know, because of course many of us believe that this housing correction will stabilize in the months ahead and that we’ll turn the corner on housing and the economy will stabilize,” Paulson said.
Freddie CEO Richard Syron and Fannie CEO Daniel Mudd will no longer run the agencies, while the Federal Housing Finance Agency will assume control of the boards. Herb Allison, the former chairman and CEO of pension provider TIAA-CREF, will head Fannie Mae. David Moffett, who served as chief financial officer of U.S. Bancorp and later the Carlyle Group as senior advisor, will take over Freddie Mac.