Morgan Stanley will be paid $95,000 to advise the Treasury Department on how to handle their new, self-imposed power to control Fannie and Freddie. This is a responsible move as the two firms own or guarantee half of all outstanding mortgages in the U.S., and since the private mortgage-backed securities markets are still seized up, Fannie and Freddie currently fund 70% of all mortgages. Of the $5 trillion in debt and mortgage-backed securities Fannie and Freddie have issued, more than $3 trillion is held by U.S. financial institutions and over $1.5 trillion is held by foreign institutions. According to a CNBC report, Morgan Stanley will:
…assess the state of the mortgage market and give the government a financial profile of the two firms…The contract will run until Jan. 17, three days before the next president is sworn into office. McLaughlin said that was a consideration in determining how long the contract would last.