This could be catastrophic.
US mortgage giants Fannie Mae and Freddie Mac are facing growing pressure as fears intensify about a potential calamity at the firms, which underpin trillions of dollars in home loans.
On Thursday, Freddie Mac shares plunged 22 percent to eight dollars, and are down over 40 percent this week and 75 percent this year.
Fannie Mae sank 14 percent to 13.20 dollars, down 26 percent in the week and 64 percent for the year.
[...]One research note this week said the two firms may have to raise tens of billions of dollars in fresh capital under new accounting rules to offset massive losses in their home loan portfolios.
And predictably the free entreprisers are now calling for government intervention. Big business doesn't want government to intervene in the economy until they start having problems.
"The government has to step in and do something," said Friedman, Billings, Ramsey & Co. analyst Paul Miller.
[...]Testifying on Capitol Hill, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke sought to calm investor jitters about the financial health of Fannie and Freddie, while urging Congress to give them new regulatory tools to better protect the country from economic and financial havoc if a major Wall Street firm were to fail.
[...]Bernanke defended the Fed's decision to provide about $29 billion in loan assistance in JPMorgan Chase & Co.'s takeover of Bear Stearns earlier this year, but said it "is not something I want to do again."
Despite Wall Street's questions about Fannie and Freddie, and concerns about other investment banks faltering, Congress has a full plate and is unlikely to give financial regulators new powers before the next administration takes over.
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