Fannie, Freddie Need for a Bailout as Stocks Tumble
Investors are watching today's news with some understandable concern, given that Fannie Mae and Freddie Mac combined hold the lion's share of the mortgage paper in the US today...
Fannie Mae and Freddie Mac tumbled in New York trading to their lowest levels in more than 17 years on concern the government will be forced to bail out the mortgage finance companies, wiping out common stockholders.
Fannie slid 22 percent, while Freddie dropped 25 percent after Barron's reported that the Bush administration is anticipating the government-chartered companies will fail to raise the equity they need to offset credit losses, prompting the U.S. Treasury to act. The companies' stock market values are well below the minimum of $10 billion in capital that each would need to raise to ``have any credibility,'' Barron's said in its story.
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