Concerns about the financial health of Freddie Mac (FRE) and Fannie Mae (FNM) and the huge repercussions which would occur in the banking and mortgage industry if either one fails has cause the government to take extraordinary action.

According to MarketWatch: "The Treasury has moved to increase its existing line of credit to Fannie and Freddie. In addition, Treasury have been given the power to buy the two companies stock. In a separate vote, the Fed board of governors voted to open its discount window lending facility to Fannie and Freddie."

The employees and shareholders of Bear Stearns will probably be upset that they did not get the same treatment. It does raise of the issue of where the line gets drawn.

Douglas A. McIntyre

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