WASHINGTON – Treasury Secretary Henry Paulson announced Friday that mortgage giants Fannie Mae and Freddie Mac will step up their purchases of mortgage-backed securities to help provide support to the crippled housing market.
Paulson also said that the Treasury Department will expand a program to buy mortgage-backed securities, which have been badly hurt by the housing and credit crisis.
That program was announced earlier this month when the government snatched control of the two troubled mortgage giants. At that time, the Bush administration said that it planned to purchase $5 billion in mortgage-backed securities issued by Fannie Mae and Freddie Mac. Paulson on Friday didn't say by how much the program would be expanded.
Paulson also didn't say how much Fannie and Freddie would increase their purchases of mortgage-backed securities, a move aimed at getting more money flow to mortgage markets.
"These steps will provide some initial support to mortgage assets, but they are not enough," Paulson said. He announced a bold new plan for the government to buy bad mortgages from troubled banks and other financial institutions. These bad mortgages have been the main culprit behind the Wall Street crisis.