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U.S. President George W. Bush has ordered the Treasury to immediately
U.S. President George W. Bush has ordered the Treasury to immediately launch a plan to strengthen the country's two largest mortgage finance firms, Fannie Mae and Freddie Mac, the White House said.

The U.S. Treasury and Federal Reserve unveiled on Sunday evening a plan to temporarily increase lending to the two companies and buy equity in either company, if necessary, to ensure "they have sufficient capital to continue to serve their mission."

Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation), which account for around half of U.S. home loans totaling $5.2 trillion, have seen their share prices plunge in recent days amid investor fears of new losses from falling house prices.

"Fannie Mae and Freddie Mac play an important role in our housing finance system, and they should continue to play this role in their current forms as shareholder-owned companies," the White House press office said.

The statement said President Bush instructed Treasury Secretary Henry Paulson to immediately work with Congress to act on this plan.

"It is crucial that Congress quickly works to enact this legislation as a complete package along with the strong oversight reform legislation recently passed in the Senate," the White House said.

Meanwhile, Freddie Mac unveiled a plan to auction off 3- and 6-month notes on Monday to raise $3 billion.

Russia's Finance Ministry gave assurances on Saturday that the tumbling share prices of the two U.S. companies would not harm Russia's Reserve and National Prosperity funds.

The ministry said that currently "the resources of the Reserve Fund and the National Prosperity Fund are not invested in the securities of these agencies."

However, the Russian Central Bank does invest in bonds of the U.S. agencies.

"In contrast to the share prices of Fannie Mae and Freddie Mac, their bond prices remain stable. This is because the U.S. government has publicly declared its willingness to financially support these companies," the ministry said.


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