8
Sep
Credit crunch 'to ease' after US moves on Fannie and Freddie
The return of much-needed confidence in money markets that could
spell the beginning of the end of the credit crunch is a likely
result of the US government's decision to take control of Freddie
Mac and Fannie Mae, it has been stated.
At the weekend it was announced that President Bush's
administration had decided to take over the running of the two
lenders to prevent their possible collapse and the consequent
damage to the US economy.
The bail-out is expected to ease the credit crunch because it will
shore up the US mortgage market.
Merrill Lynch's head of Asia debt origination Jon Pratt told
Bloomberg the move should "restore long-term confidence" in the
markets, as share prices rose in early Far East trading.
London's Ftse is also expected to be boosted, with Graham Neale of
stockbrokers Killik & Co telling the BBC: "The markets are
certainly going to rally today because investors are going to say
'maybe we can see light at the end of the tunnel in terms of the
credit crunch'."
Such a situation could make matters easier in the coming months for
those buying for investment due to an improved availability of
finance.
