8/21/2008

Powers that U.S. Treasury Secretary Henry Paulson received from Congress allowing the government to rescue Fannie Mae and Freddie Mac may trigger exactly what the measures are intended to prevent, analysts and investors said. A chance of the government making a move has created uncertainty in the market, raised borrowing costs for the government-sponsored enterprises and boosted odds that the companies will need taxpayer funding. "It is the lack of clarity of what exactly the government is going to do, and what Congress is going to do, that is sending shivers" through investors, said Axel Merk of Merk Investments.

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