Takeover of Fannie Mae, Freddie Mac likely

WASHINGTON, Sept. 5 (UPI) -- U.S. officials told Fannie Mae and Freddie Mac Friday the institutions will be placed in conservatorship, The New York Times reported.

Under the plan, the government would guarantee the two mortgage giants' debt. Top executives and the boards of both institutions would be ousted, and shareholders would lose most of their investment.

Senior Bush administration officials told the Times the executives were told in separate meetings that the plan would become public before Asian financial markets open for a new week Sunday.

President George W. Bush signed a law this summer allowing the government to provide Fannie Mae and Freddie Mac with capital through loans or direct investment. Treasury Secretary Henry Paulson said then that he thought the measure would restore confidence in the two lenders.

Both companies reported large losses in their quarterly financial statements last month and predicted further drops in housing prices.