Fannie, Freddie Lending Power May Rise

Wall Street Journal (03/19/08) P. A3; Hagerty, James R.; Paletta, Damian
At a press conference scheduled for today, Office of Federal Housing Enterprise Oversight director James Lockhart will announce a plan that will allow Fannie Mae and Freddie Mac to infuse the struggling mortgage market with another $200 billion in funding. The plan involves relaxing a rule that requires the government-sponsored enterprises (GSEs) to top off their minimum capital requirements by 30 percent; under the new plan, that mandate will be lowered to 20 percent—dropping the capital requirement at Freddie Mac by $2.6 billion and at Fannie Mae by $3.2 billion. Additionally, it will require the GSEs to sell preferred shares or take other steps to generate billions of dollars in capital this year.