**(Now do you understand you dont usually try to pick a bottom or catch a falling stock (knife?)....you'll end up with NO FINGERS to press buy button later....short has been BEST place to be.....as atteempts to get past even feeble resistance fails......both stocks to open single digits!!!! and these are WIDELY HELD FOLKS GE IS TOO ...dont think GE's numbers were good enough to pull mkt up.....NEW LURKERS I encourage you to GO BACK in time on my site and see WHAT I SAID and WHEN I SAID IT)
Today could be another 90% down volume day.......on our way to a ST bottom)
Fannie, Freddie: 30% and sinking fast
Continue sharp slide in shares of mortgage finance firms raises new concerns about need for new capital, threat of government takeover.
July 11, 2008: 8:35 AM EDT
NEW YORK (CNNMoney.com) -- The growing anxiety over Fannie Mae and Freddie Mac escalated on Friday as shares of the mortgage finance giants plunged in pre-market trading.
About 60 minutes before the market open shares of Fannie (FNM, Fortune 500) were off nearly 50%, while shares of Freddie (FRE, Fortune 500) were off 38% from their already battered close on Thursday.
This week has already seen shares of Fannie lose 30% of their value, while Freddie shares tumbled 45%. For the year, Fannie is down 67% and Freddie 77%.
The two firms own or back more than $5 trillion of home mortgages and are a crucial source of funding for banks and other home lenders looking to make additional loans. If they were unable to do so, it would significantly raise the cost and availability of mortgage loans, causing significantly more problems for already battered housing prices and sales.
The Wall Street Journal reported a number of scenarios it said are being discussed by bankers and analysts to deal with investors' current crisis of confidence in the firms, including possibly having the Federal Reserve purchasing some of their debt or mortgage-backed securities, having the Fed make large, 10-year loans to the companies or even having the Treasury buying stock in the companies.
The paper's report did not indicate if the government is moving to take any of these steps, but it reported comments from many leading officials that the firms are too important to the housing market and the overall economy to be allowed to fail.
The paper said that the Office of Federal Housing Enterprise Oversight, the regulator of Fannie and Freddie, could take control of the firms if their capital falls too far below required levels. The paper said it is unclear how the firms would operate in that situation, known as a conservatorship.
It is unclear if current shareholders would see their holdings wiped out under some of these options - leading to the pre-market sell-off.
A Fannie spokesman said the company had no comment Friday morning, while a spokeswoman for Freddie was not available for immediate comment. Both firms issued statements Thursday saying they had the necessary capital to continue operating, adding they would not comment on the decline in their stock value. But the decline in their stock makes raising additional capital that much more expensive and difficult.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment