Update: Bush administration comes to rescue of Fannie, Freddie

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Update: The A.P. now reports the Bush administration, acting in concert with the Federal Reserve, has announced steps to rescue Fannie Mae and Freddie Mac: ‘(Treasury) Secretary Henry Paulson said the government is planning to expand its current line of credit to the two companies should they need to tap it and Treasury could buy equity captial in the companies -- if needed. The moves will require congressional approval.’

The L.A. Times’ Tom Petruno blogs, ‘The Bush administration acknowledged today that it couldn’t afford to leave mortgage giants Fannie Mae and Freddie Mac on their own to face another ravaging by Wall Street.

Earlier: The New York Times reported that the Bush administration will announce plans tonight to ask Congress for authority to rescue Fannie Mae and Freddie Mac: ‘Alarmed about the sharply eroding confidence in the nation’s two largest mortgage finance companies, the Bush administration will ask Congress to approve a rescue package that would give the government the authority to buy billions of dollars in stock in Fannie Mae and Freddie Mac and also lend to the companies to meet their short-term funding needs, people briefed about the plan said on Sunday.’

The administration appears to be rushing to have a plan in place -- or at least an announcement of a plan -- in time to reassure investors around the world before Monday-morning trading begins in global markets.

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