Headlines
Treasury, Federal Reserve Act to Bolster Fannie and Freddie
In an unprecedented move to shore up confidence in Fannie Mae and Freddie Mac, the Bush administration announced that it will seek legislation to temporarily increase the companies' line of credit with Treasury and to allow the government to buy stock in the companies if needed. The administration's plan also involves amending the omnibus housing legislation pending in Congress to give the Federal Reserve a consultative role in the new government-sponsored enterprise regulator's process for setting capital requirements. The Federal Reserve also announced that it would open its discount window to Fannie Mae and Freddie Mac if needed. Any lending would be collateralized by U.S. government and federal agency securities.
OTS Closes IndyMac; FDIC Puts Failure into Perspective
The Office of Thrift Supervision on Friday closed IndyMac Bank, a $32 billion bank in Pasadena, Calif., and transferred operations to the Federal Deposit Insurance Corporation. A successor institution, IndyMac Federal Bank, will open for business today. IndyMac's failure was attributed primarily to the collapse in the residential real estate market.
After seeing news coverage of the IndyMac failure – some accurate and some not – FDIC Chairman Sheila Bair issued a statement offering perspective on the health of the banking industry. "All bank depositors should understand that their insured deposits are safe. IndyMac is only one of 8,494 depository institutions operating throughout the country and represents only .2 percent of banking industry assets," Bair said. "The overwhelming majority of banks in this country are safe and sound. The chance that your own bank will be taken over by the FDIC is extremely remote. And if that does happen, you will continue to have virtually uninterrupted access to your insured deposits." Read Bair's statement.