Instant View: Key points and reaction

NEW YORK (Reuters) - The U.S. Treasury Department and Federal Reserve on Sunday announced sweeping measures to lend money and buy stocks if necessary in embattled mortgage finance companies Fannie Mae and Freddie Mac.

KEY POINTS: * "(Their) continued strength is important to maintaining confidence and stability in our financial system and our financial markets. Therefore, we must take steps to address the current situation as we move to a stronger regulatory structure," Treasury Secretary Henry Paulson said in a statement. * Paulson says U.S. Treasury to temporarily increase line of credit for Freddie Mac, Fannie Mae * Treasury to have temporary authority to buy equity in either firm if needed * Fed authorizes Fannie Mae, Freddie Mac to borrow at its discount window rate if necessary * Treasury official: GSE liquidity, equity backstops need Congress approval, could be done by end of week

COMMENTS:

THOMAS LAWLER, LAWLER ECONOMIC AND HOUSING CONSULTING,

LEESBURG, VIRGINIA:

"After Paulson's very, very short statement on Friday, I think a lot of people expected an announcement would be coming. What would be the primary reason to support them? It would be to alleviate anyone's concerns that the companies would not have access to liquidity. Everybody knew that Freddie had a bill sale on Monday.

"They both had a liquidity contingency plan already. They could sell certain assets from their liquidity portfolio. Or, collateralized borrowing using mortgages on their balance sheet. That has always been part of their liquidity contingency plan. The discount window figures in (because) I think folks were worried about 'what if they wanted to do collateralized borrowing,' but nobody wanted to do it (be a counterparty). It has always been part of their contingency plan, but these are crazy markets. The Treasury and the Fed... said let's tell folks that for whatever reason they can't access the debt market and collateralized borrowing, we're going to make sure they don't have a problem."

GEORGES YARED, FOUNDER AND CHIEF INVESTMENT STRATEGIST, YARED

INVESTMENT RESEARCH, MINNEAPOLIS:

"I think the government is going to do everything they can to keep Freddie and Fannie going other than having to take them over. I think Paulson was trying to stem any panic. He was saying it's bad but its not critical or fatal.

"It's a comfort statement more than anything to stem the selling. Its no longer a growth investment. They're trying to establish themselves as a stabilizing investment.

"That's a very comforting statement. He put a real quantifiable number on it.

"What investors were fearful about was the lack of liquidity, which would have necessitated the raising of additional capital. But with that statement by the CEO. That's a very very comforting statement.

"Both these stocks should go up tomorrow."

SCOTT FULLMAN, DIRECTOR OF DERIVATIVE INVESTMENT STRATEGY, WJB