Congressman Barney Frank, Chairman of the Financial Services Committee, says this is really happening:
"Rep. Barney Frank (D., Mass.) confirmed that Treasury Secretary Henry
Paulson is planning government intervention to back troubled mortgage
giants Fannie Mae and Freddie Mac.
The chairman of the House Financial Services Committee, said in a
statement Saturday that Mr. Paulson "intends to use the powers that
Congress provided it" in a law passed in July to keep Fannie Mae and
Freddie Mac stable and functioning. But Mr. Frank said he didn’t "know
the details of the proposed interventions," and a Treasury spokeswoman
declined to comment…
It is also expected to involve the government injecting capital into Fannie and Freddie. That could happen gradually on a quarter-by-quarter basis, rather than in a single move, one person familiar with the matter said…
Among the issues with which Treasury has been wrestling is whether to make an investment at such a low price that shareholders are effectively wiped out. Mr. Paulson is cautious about any plan that appears to benefit shareholders because he doesn’t want the government to be seen as bailing out investors who for years profited from the companies’ success."
Frank Confirms Treasury Intervention To Shore Up Fannie Mae, Freddie Mac
DEBORAH SOLOMON and DAMIAN PALETTA
WSJ, September 6, 2008 2:39 p.m.