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Fannie, Freddie shares keep falling

Fannie, Freddie shares keep falling

Shares of troubled mortgage finance companies Fannie Mae and Freddie Mac continued their freefall Thursday, as market expectations grew that the government would intervene and eliminate common stockholders' investment.
Shares of the two companies _ which together hold or guarantee half the U.S. mortgage debt _ have lost more than half their value since Monday and are down more than 90 percent for the year.
Fannie Mae's stock fell 32 cents, or 7.3 percent, to $4.08 in morning trading Shares of Freddie Mac fell 32 cents, or 9.9 percent to $2.93.
Many observers say Treasury Secretary Henry Paulson is not interested in protecting shareholders, and only in Fannie and Freddie's ability to support the battered mortgage market.
That means a government rescue might not occur until there is evidence the mortgage companies' are unable to sell short-term debt _ an indication they would no longer be able to operate normally.
Freddie in particular has investors and analysts fearful. The company earlier this year promised to raise $5.5 billion to shore up its finances but has not yet done so and its sinking share price makes raising that money far less feasible.
Fannie Mae's chief executive has sought to reassure investors that no bailout is imminent and that the company's financial position remains solid.
The Bush administration last month unveiled a plan to provide unlimited government loans to the two mortgage giants and to purchase stock in the two companies if needed for a period covering the next 18 months.
The two government-sponsored companies are the largest source of funding for home mortgages in the U.S. But they have struggled with soaring losses from mortgage defaults. Washington-based Fannie and Freddie, have lost a combined $3.1 billion between April and June, and investors fear the losses will continue to grow.


Updated : 2021-02-25 19:32 GMT+08:00