Speaking in an interview with NBC on Saturday, U.S. Treasury Secretary Henry Paulson said government had no plans to inject capital into Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Max despite poor earnings reports from both institutions in the second quarter.
Last week, Fannie Mae reported a loss per share excluding items to $2.52 versus estimates of a $0.72 loss, while Freddie Mac had reported a loss of $1.63 per share versus expectations of a $0.54 loss.
The Treasury Secretary went on to explain that the U.S. economy was continuing to suffer on the back of a weak housing sector, and that until housing stabilized, the economy would continue to face difficulties.
Earlier in July, Paulson succeeded in convincing Congress to pass legislation allowing an unlimited line of credit to both GSEs along with the authority to purchase stock. Both companies came under serious pressure prior to the passing of legislation given rising foreclosure rates in the United States.
By Erik Kevin Franco and edited by Megan Ainscow