Recent turmoil in the housing and financial markets have caused concern over the future of Fannie Mae and Freddie Mac, which are chartered by Congress as governmentsponsored enterprises (GSEs) and are widely believed to have an implicit guarantee from the federal government. Treasury Secretary Henry M. Paulsen, Jr. has proposed legislation to increase the two GSEs' line of credit with Treasury from its current $2.25 billion each to an unspecified higher amount and to allow Treasury to purchase stock from Fannie and Freddie. The Federal Reserve has taken actions to allow Fannie and Freddie to borrow directly from the Fed. The Office of Federal Housing Enterprise Oversight (OFHEO) -- the GSEs safety and soundness regulator -- has repeated assurances that Fannie and Freddie have adequate capital, but as highly leveraged financial intermediaries Fannie Mae and Freddie Mac have limited resources against losses. This report will be updated as warranted. Source: Congressional Research Services
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