Fed steps in over Fannie Mae and Freddie Mac

The two US government-backed companies own or hold about half of the country's mortgage debt, roughly $5.4tn.

The takeover follows the federal government's bailout of investment bank JPMorgan Chase in a move backed by the Federal Reserve Bank.

Regulators set up a conservatorship to provide stability to financial markets, support the availability of mortgage finance, and protect taxpayers.

The companies - which saw a combined $3.1bn loss from April to June - will open as normal and will be allowed to expand their mortgage-backed securities, about $20bn a month without any constraints.