Bernanke tells Freddie discount window open: sources

By Patrick Rucker

WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke told Freddie Mac chief Richard Syron that his company and Fannie Mae could take advantage of the emergency discount window, according to two sources familiar with the conversation between Bernanke and Syron.

Fed spokeswoman Michelle Smith said U.S. central bank officials were following the situation with struggling Fannie Mae and Freddie Mac closely but disputed that access to the discount window had been offered.

"Federal Reserve officials are following the situation closely. However, there has been no discussion with the GSEs about access to the discount window," Smith said in a statement issued on Friday afternoon.

On Friday night, a Fed spokeswoman confirmed that there had been a call between Bernanke and Syron on Thursday initiated by Syron. But she said there was no discussion during that call about Freddie Mac or Fannie Mae accessing the discount window.

However, two sources familiar with the conversation between Syron and Bernanke later affirmed the conversation and what was said about potential discount window action.

The two sources said Bernanke and Syron spoke by phone Thursday afternoon and in that call the central bank chief said he intended the discount window to be opened if necessary to Fannie Mae and Freddie Mac.

A senior senator said at a press conference on Friday afternoon that such action was among a range of possibilities under discussion to help the struggling mortgage lenders weather a crisis of confidence.

"I know that both the Fed and the Treasury are looking at various options...including things like the discount window," Senate Banking Committee Chairman Chris Dodd told a news conference on Capitol Hill on Friday.