The US government on Sunday seized control of the troubled Fannie Mae and Freddie Mac mortgage groups in what could become the world’s biggest financial bail-out, reports the FT. While the Bush administration stopped short of using the word “nationalisation”, analysts said the moves amounted to de facto government control. Fannie and Freddie have $5,400bn in outstanding liabilities and guarantee 75% of all new US mortgages. As regulators took charge of the companies, the government said it would inject up to $100bn in each to ensure they meet their debts, buy their mortgage-backed bonds starting with an initial $5bn purchase, and provide an unlimited liquidity facility until end-2009. The chief executives of both groups will leave after a transition period. Shares in both will continue to trade but shareholders face the prospect of massive dilution. Bondholders would have their assets underpinned by the US government support. Bloomberg reports on the impact on the yen and other currencies. Reuters says Asian banks’ shares surged Monday on the news. More FT analysis here. For a broad range of reactions, see FT Alphaville’s “Fannie & Freddie link-fest”.