WASHINGTON (AP) — The Obama administration says it is removing the $400 billion financial cap it will provide to Fannie Mae and Freddie Mac to keep the mortgage giants from failing.
Treasury Department officials said the cap will be replaced with a flexible formula to ensure the companies will have all the government support needed to stand behind the billions of dollars in mortgage-backed securities they sell to investors.
Since the financial crisis hit last year, the Fannie and Freddie have received $111 billion in government infusions. While most analysts believe that the companies are unlikely to use the full $400 billion, the administration decided to remove the cap to eliminate any uncertainty about the government's commitments.
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