Friday, July 11, 2008

Investors Run from Fannie Mae and Freddie Mac

A few numbers:
Current status of Fannie and Freddie:
The anxiety over Fannie Mae and Freddie Mac, crucial to a recovery of the battered housing market and the economy as a whole, reached fever pitch on Friday as shares plunged on speculation of a looming bailout.

Immediately after the markets opened, shares of Fannie and Freddie fell more than 47% from their already battered closing price the day before. They soon rebounded later in the morning but Fannie shares were still down 22% and Freddie shares were off 20% in midday trading. ...

Even before the latest report on a possible rescue plan, speculation about the future of the firms this week sparked a run by investors away from their shares. That in turn raised questions about how difficult and expensive it will be for them to raise needed capital in the future, which fed into the stock plunge in a vicious cycle.


  1. Lance said:
    The scare created on the whole though by lots of people "crying wolf" in concert has had a temporary effect on what is on the whole a normal real estate downcycle. The news stories in the mainstream media whose ultimate sources were the bubbleheads show this to be true.

    October 04, 2007 10:16 PM

  2. va_investor said...
    The sky is not falling. This is a normal cycle.

    September 28, 2006 6:56 AM

  3. va_investor said...
    We are experiencing a normal cycle in real estate. Nothing more, nothing less.

    September 25, 2006 12:23 PM

  4. Lance said...
    It's pretty impressive when you hear the people with the education and experience saying that this is a normal cycle and that we're close to the bottom of it ... and contrast their realistic expectations against those by uneducated and inexperienced bloggers whose sole qualification for commenting is knowing how to maintain a blog. If I were a bubblehead at this point, I'd be doing my best to distance myself from any and all bubblehead beliefs and mantras! The end is near ... for this bubblehead foolishness!

    October 10, 2006 9:38 AM

  5. And imagine that only a short time ago, Congress was proposing using them to bail out the failing real estate market, increasing the loan limits and decreasing the ratios. Now this.

    Interest rates will rise and prices will fall even more as a result the interest rate increases.

    Now is a great time to...


    (or rent)

  6. Meantime, and swamped by the speculation about FNM and FRE, the Feds Friday swooped in and closed IndyMac in Passadena, Ca. One-time specialist in Alt-A mortgages was unable to find investors willing to put up the cash it needs, so it was taken over the FDIC.
    Would have been a headline, IMO, if speculation about FRE and FNM not still raging.