Washington takes over Fannie Mae and Freddie Mac

By late summer 2008, Fannie Mae and Freddie Mac carried more than five trillion dollars in mortgage debt and securities between them, and the subprime collapse had made investors doubt either company could raise the cash to cover its losses. On September 7, 2008, James Lockhart, director of the Federal Housing Finance Agency, announced that both companies were being placed into federal conservatorship. Their chief executives and boards were dismissed on the spot, and the Treasury received new senior preferred stock and warrants covering 79.9 percent of each firm. Lockhart said there were no plans to liquidate either company…