Washington – The government announced on Sunday that it was taking control of troubled mortgage finance giants Fannie Mae and Freddie Mac, effectively wiping out shareholders’ interest in the publicly traded companies.
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The regulator of the two companies, the Federal Housing Finance Agency (FHFA) will manage the two companies on a temporary basis.
The takeover is the second rescue bid engineered by the U.S. Treasury Department in little more than six weeks. It came as confidence in the firms ability to keep operating amid a deepening housing crisis continued to erode.
Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart, regulator for the so-called GSEs or government-sponsored enterprises, called a Sunday-morning news conference to spell out the latest rescue effort.
The two mortgage companies are a vital cog in the United States housing industry because they own or guarantee almost half the nation’s $12 trillion in outstanding home mortgage debt. The housing sector would have difficulty recovering from its deepest slump since the Great Depression unless Fannie or Freddie are stabilized and able to continue their role in buying mortgage loans and packaging them into securities sold around the world.
oy vey!
This is very very very bad bad news. All the shareholders are being wiped out.wiped clean of all the shares .This is billions of dollars. I have a feeling that the stock market will react very bloody to this…
Did you hear a crash?
It is interesting how they always announce these things on Sun. when the financial markets are closed
It’s just shows as what we all feel and know, “it’s the beginning of the end” r’l, there is defiantly going to be a major reaction tomorrow, and now more banks wouldn’t be afraid to go out to the public and say ” we are sorry we messed up big time”
its not bad for the people that want to finance a home. if you have a low credit score you will be able to get a mortgage now
in reality it MIGHT turn around the entire market. fre and fnm where the MAIN obstacle for any housing turnaround. noone can blame ‘lack of confidence’ once they are bailed out. rates for 30 Y fix should drop at least one hundred basis points
even common shares will trade, and not as fre.pk or fnm.pk, just reg trading. shares will have to rebound slightly after tomm’s crash, bec sinse common shares won’t be totaly wiped out, shorts will have to cover. a great oportunity for daytraders. be carefull and good luck!
First the market will go up so all the suckers can buy stock from the hedge funds, mutual
funds,and all the other crooks who will tell you to buy so they cam sell you what they need to unload.Then the market will tank. So be smart and dont fall into the trap.
tommorow shouls be very interesting……
BTW S&P futures are only up more then 26 points for all the experts here
Many finanacial institutions own large chunks of preferred stock in Fannie and Freddie this means that they will have major losses to be reflected in their Asset values. During the next quarter you will see another few major bank failures based on the losses from being wiped out by the Government takeover of Fannie and Freddie.