In the aftermath of unprecedented actions from the U.S. Treasury and the Fed earlier on Friday, U.S. Treasury Secretary Henry Paulson said Fannie Mae and Freddie Mac will resume buying mortgage debt under the surveillance of the Treasury Department, and an expansion of the Mortgage- Backed Security purchase program.
"These two steps will provide some initial support to mortgage assets, but they are not enough. Many of the illiquid assets clogging our system today do not meet the regulatory requirements to be eligible for purchase by the GSEs or by the Treasury program," said Paulson.
The Treasury secretary also said he planned on working closely will congressional leaders to allow for the government to purchase illiquid assets in the market in an effort to bolster financial confidence, and eventually implement new legislation to reinforce the financial marketplace.
"Right now, our focus is restoring the strength of our financial system so it can again finance economic growth," said Paulson. "The financial security of all Americans - their retirement savings, their home values, their ability to borrow for college, and the opportunities for more and higher-paying jobs - depends on our ability to restore our financial institutions to a sound footing."
In the question answer session that followed, Paulson said he projected the asset plan would cover hundreds of billions.
By Erik Kevin Franco and edited by Sarah Sussman
©CEP News Ltd. 2008