Investors dumped the stocks of Fannie Mae and Freddie Mac after Barron's reported the increasing likelihood of a U.S. Treasury bailout that would approach nationalization of the two housing finance titans.
The weekly financial newspaper said such a move could wipe out existing holders of the largest U.S. home funding companies' common stock.
Preferred shareholders and even holders of the two government-sponsored entities' $19 billion of subordinated debt would also suffer losses.
Shares of Fannie and Freddie, the two providers of home mortgage funding, fell more than 16 percent and some of their bonds sharply underperformed Treasuries.
Monday, August 18, 2008
Investors Dump Fannie Mae and Freddie Mac Stock