IF THEY WORK OVER THE WEEKEND, THERE'S A REAL PROBLEM

As soon as I heard that Sec. Paulson and others were working over the weekend on the Fannie and Freddie problem, I knew it was serious. It looks like they may have come up with a workable plan and it "only" authorizes a $300 billion line of credit for the pair. From the NYT:

While the Treasury did not specify the size of the packages, officials briefed on the plan said they were told by administration officials that, to be meaningful, Congress should consider extending the line of credit to the two institutions to $300 billion.

Mark Thoma has a nice collection of other takes on this and I got a chuckle of this "translation" by Felix Salmon:

China and other major foreign investors hold a huge amount of Agency debt, on the understanding that it's risk-free. I'm here to tell them that, yes, it's risk free. Nothing to worry about here. And to prove that there's nothing to worry about, I'll put out a press release on a Sunday night which is designed to reassure you all. There, you're reassured, right?