Fannie, Freddie books under inspection - report

Plunge in stock prices of the two mortgage finance giants triggered scrutiny by bank examiners, according to NYT.

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LONDON ( -- Bank examiners from the Federal Reserve and the Comptroller of the Currency are scrutinizing the books of U.S. mortgage finance giants Fannie Mae and Freddie Mac, according to a published report.

U.S. Treasury Secretary Henry Paulson told The New York Times Monday that the examiners began inspecting the two companies' books after their plunging stock prices roiled the market.

Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) own or back about $5 trillion of home mortgages. Their stock has plummeted in recent weeks on concerns about the losses they face amid the housing slump.

Paulson unveiled a plan earlier this month that would give the two firms an extended line of credit with the U.S. Treasury. Under the plan, the government would also be able to buy stock in Fannie and Freddie if they aren't able to raise enough capital on their own.

Paulson told the Times he still believes the two firms have enough cash to withstand further declines in the housing market.  To top of page

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