A SENIOR US treasury official has welcomed Freddie Mac's efforts to continue raising capital from private investors following the announcement of the government rescue plan for the giant mortgage firm and sister company Fannie Mae.
David Nason, assistant secretary for financial institutions and a key aide to Hank Paulson, treasury secretary, on Fannie Mae and Freddie Mac, said: "The fact that these organisations are still trying to think creatively about ways to raise private capital is a positive."
His comments came as Mr Paulson acknowledged in a televised interview that the US economy was facing a "tough time" that could last for months but was fundamentally very strong.
Mr Paulson said the government's support for Fannie Mae and Freddie Mac was crucial to restore stability in the US capital markets.
"These institutions have investors all around the world, and those investors need to know that we in the USA understand the importance of these institutions to our capital markets, and to our economy and to our housing market," Mr Paulson said.
Freddie Mac cleared one of the last remaining obstacles to raising new capital through a planned $5.5 billion (€3.5 billion) stock offering when it received approval to register with the US Securities and Exchange Commission on Friday.
The rescue plan unveiled earlier this month by Mr Paulson has fuelled concerns that any capital-raising could be hit by shareholder fears that they would see their stakes diluted if the government were to take an equity stake in the mortgage groups.
However, treasury officials have been generally comforted by investors' reaction to the rescue plan for Fannie Mae and Freddie Mac, whose shares fell early in the week but rebounded along with other financial institutions.
"The market appreciates that the government is engaged and working to address this situation," Mr Nason said.
"It looks favourably on the fact that we are going to be on top of this in a proactive manner."
The rescue plan met some strong resistance in the US Congress last week from legislators, particularly Republicans, concerned about the potential loss to taxpayers. - (Financial Times)
