The Treasury said it would buy as much as $200bn in preferred stock in the mortgage companies

The US government has bailed out Fannie Mae and Freddie Mac to stop them going under.

The Treasury said it would buy as much as $200bn in preferred stock in the mortgage companies.

The government decided that Fannie and Freddie—which buy mortgages so that lenders have money to invest in more home loans—were running out of money in the wake of the subprime mortgage disaster, according to Bloomberg.

The take-over pushed the mortgage rate lower but left investors, many of whom are banks, feeling short changed.

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