The US Treasury on Wednesday backed away from assurances it would not have to rescue Fannie Mae and Freddie Mac, as the crisis surrounding the mortgage groups deepened and their shares fell for a third day, reports the FT. Despite new powers to extend its credit lines to Fannie and Freddie and invest in their equity, the Treasury has insisted it does not expect to make use of the new authority. But on Wednesday, a Treasury spokesman declined to repeat that assurance, saying only that the Treasury was “vigilantly” monitoring market developments. The big question, according to the WSJ, hinges on the $225bn in debt the companies need to refinance by end-Sept. Reuters reports that Fannie and Freddie’s shares hit their lowest in almost 20 years on Wednesday while their bonds rallied.

This entry was posted by Gwen Robinson on Thursday, August 21st, 2008 at 5:33 and is filed under Capital markets. Tagged with Fannie Mae, freddie mac. Edit this entry.