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Fannie, Freddie may have to raise as much as $20b

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Associated Press / March 29, 2008

WASHINGTON - The federal regulator who oversees Fannie Mae and Freddie Mac said yesterday they likely will have to raise between $10 billion and $20 billion in new capital to offset the impact of loosened regulatory restraints.

James B. Lockhart, director of the Office of Federal Housing Enterprise Oversight, spoke a little over a week after his agency revealed an agreement with the two mortgage finance companies. The deal reduced the cash cushion they are required to maintain so they could expand their roles in the stricken housing market.

Amid financial market turmoil sparked by the housing downturn, Lockhart's agency has been negotiating with Fannie and Freddie on how best to restore stability to the market for mortgage-backed securities, three-quarters of which are issued by the government-sponsored enterprises.

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