Fannie and Freddie sat on a wall.
Fannie and Freddie had a great fall.
All the king’s horses and all the king’s men
Couldn’t put them together again.
In a move that set the tone for financial shares and indeed the entire stock market Monday, Fannie Mae (ticker: FNM) and Freddie Mac (FRE) were down sharply at midday following Barron’s report suggesting that a federal recapitalization of the beleaguered mortgage giants is increasingly certain.
Senior editor Jonathan R. Laing, who in a March 10 cover story suggested Fannie and Freddie are toast, writes in the current issue (“The Endgame Nears for Fannie and Freddie,” Aug. 18) that the powers granted the federal government under the recently passed housing bill will result of a taxpayer-financed recapitalization of the government sponsored enterprises.
The likely result would be the wipeout of the current common holders plus big hits to the holders of the $14 billion of Fannie and Freddie preferred stocks, Laing writes.
Fannie Mae and Freddie Mac have now seen their stock prices decline over 90% from their all time highs and if Barron’s is right they’re both on their way to zero:
Fannie, Freddie Take a Big Fall
August 18, 2008