Sep. 7, 2008 - Paulson pulls the big bazooka

The first reactions are positive

Today, CNN reported that the Federal Government has seized control of Freddy Mac and Fannie Mae to help shore up the damaged housing market that could cost taxpayers $200 billion.  It is anticipated the bailout should result in lower mortgage costs and make credit more available.  Rates could drop by 1 per cent. Higher lending standards will remain tight and risky borrowers wills till pay extra fees.

Two months ago Secretary of Treasury Hank Paulson said that Congress had given him a bazooka by granting him power to intervene to support Fannie Mae and Freddie Mac. That comment might have very well exasperated the money problems, resulting in today's announcement. 

However, the first reactions are positive.  Both presidential candidates agree on the takeover.  CNN reports, "Sen. Charles Schumer, D-N.Y., a member of the Senate Banking Committee, said that Paulson had "threaded the needle just right" with the plan, noting that it will likely be met with praise from other lawmakers. At first blush, Wall Street seemed encouraged by the news, although the true test will come when financial markets around the globe open Monday. Pimco's Bill Gross, a widely followed bond fund manager, said that the Freddie-Fannie plan was the right move. This is a significant step and almost exactly what we had hoped for,"  

Here is the statement made by Paulson today on the takeover.