Fed Chair Says Fannie, Freddie Are OK

Federal Reserve Chairman Ben Bernanke reassured Congress on Wednesday that Fannie Mae and Freddie Mac are in “no danger of failing.”

The two mortgage giants are “adequately capitalized,” Bernanke said. However, “weakness of market confidence is having an effect” on the companies, making it difficult for them to raise capital.

“We will work our way through these financial storms,” Bernanke said.

He called the depressed housing market the central economic issue and urged Congress to approve legislation helping consumers refinance out of troubled mortgages, set a stronger regulator for mortgage giants Fannie Mae and Freddie Mac, and approve a new Treasury Department plan to bolster the two firms, which back half of U.S. mortgages.

Source: The Associated Press, Jeannine Aversa (07/16/08)