Tab for Government Rescues Rises to $900 Billion (Reuters)

Created by : Airlight View profile

Government Bailout

The U.S. Federal Reserve stepped in to rescue insurance giant American International Group from bankruptcy with an $85 billion loan on Tuesday, the latest in a series of bailouts and loans for the financial and housing sectors.

The action brings the total tab for government rescues and special loan facilities this year to more than $900 billion. Following are details of actions and amounts:

- $200 billion for Fannie Mae [FNM 0.43 --- UNCH (0) ] and Freddie Mac [FRE 0.27 --- UNCH (0) ] . The Treasury will inject up to $100 billion into each institution by purchasing preferred stock to shore up their capital as needed. The deal puts the two housing finance firms under government control.

- $300 billion for the Federal Housing Administration to refinance failing mortgage into new, reduced-principal loans with a federal guarantee, passed as part of a broad housing rescue bill.

- $4 billion in grants to local communities to help them buy and repair homes abandoned due to mortgage foreclosures.