House of Cards
Jul 10th, 2008 at 10:20 pm by Susie
Here comes that big wind that’s going to blow them all away:
WASHINGTON (AFP) - A downward spiral for mortgage giants Fannie Mae and Freddie Mac was unabated Thursday despite reassuring comments from Treasury Secretary Henry Paulson, as fears grew about the firms which underpin trillions of dollars in the housing system.
Freddie Mac shares plunged 22 percent to 8.00 dollars, 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.
“The twin titans of lending both face pessimism, from the options pits and analysts,” said Mark Fightmaster at Schaeffer’s Investment Research.
Analysts at Charles Schwab & Co. said the shares were roiled by “sobering comments about the solvency of Fannie Mae and Freddie Mac.”
[...] “Could anyone reasonably believe that a two percent reserve fund can cover all the losses that are likely to be seen? ... Clearly, Fannie and Freddie would have no ability to survive without a government bailout. This means that taxpayers will be on the hook for hundreds of billions of losses, perhaps even more than one trillion.”
For more in depth, see “The Automatic Earth”:
http://theautomaticearth.blogspot.com/