After an initial surge this morning, shares of mortgage giants Fannie Mae and Freddie Mac have more or less returned to where they closed Friday afternoon. Shares of both companies rose on Friday after a report that the Federal Reserve would open its credit window to them. That report turned out not to be true until, a couple of days later it was true.
The news today that Treasury Secretary Henry Paulson asked Congress for authority to buy shares both companies and lend to them, plus the (for real this time!) opening of the discount window, was meant to bolster investor confidence. Shares in both were up somewhere around 35 percent in pre-market trading. That now looks like it was some short-covering. Investors don’t seem interested in getting long either company. Those early morning gains have largely been lost, with both companies up less than 3% right now.
Is this a vote of no confidence in the government-chartered companies? Or do investors still suspect that a government takeover could wipe out shareholders?
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***TILT***
Don’t blame it on the context, Fannie and Freddie were really bad guys :
http://lacrisepourlesnuls.blogspot.com/2008/07/fannie-mae-indymac-rvlations-sur-des.html
@12:14
Could you have Obama call me and translate that post? I’m mortified I don’t speak or read French. C’est domage.
so allowing banks and brokerages to get together was a good idea, right?
der.
Shares are still down, but the auction went off without a hitch.
http://news.yahoo.com/s/nm/20080714/bs_nm/fannie_freddie_dc_26
Toldja. :)
M
I wouldn’t put money in either Fannie Mae or Freddie Mac at this time. The only assurances anyone has at this point is the agreement of Henry Paulson and Ben Bernanke. Henry Paulson is going to be history in five months’ time, and Bernanke may not get reappointed when his term ends. If Congress does enact legislative changes, then maybe this will all assume an air of permanency.
The Fannie Mae/Freddie Mac idea is a bad one, and it has a sickening history of corruption. I can’t believe it’s been tolerated as long as it has.
@2:42
if i were cynical i would say fannie and freddie have little to worry about since the democrats are taking full control of everything in 6 months.
the democrats are involved in this entire mess from top to bottom.
or, perhaps, they just throw their mortgage friends under the bus.
but maybe you’re right. chris dodd is trying to figure this out himself right now.
@2:48 p.m. I have grasped that Fannie Mae originated under FDR. It also wasn’t lost on me who Franklin Raines’ big benefactor was.
No one tried to clean up the messes at the GSEs when there was a reasonable opportunity to do so.
Democratic or Republican — is Congress really ready to sign onto $5 trillion in liability on a few days’ notice?
I’m sure Chris Dodd is having a headachey kind of afternoon.
It’s all so mondo weird. The big mortgage “rescue” bill that barrelled through the Senate just last week was predicated on expanding Freddie Mac and Fannie Mae. And now everyone is saying Freddie Mac and Fannie Mae are insolvent with the commitments they already have! And the market keeps tanking! What’s a policy maker to do?
@4:31
i for the life of me can’t understand how they’re still building 1700 per square foot condos all over nyc.
are rich, mostly educated people really this fucking stupid??
this reminds of the late 1990′s when everyone was planning their retirement with their 401k millions.
funny, i don’t really hear people talk about their 401k’s much anymore.
i mean i have friends who work at say MS and MER with bonus options that ain’t going to be worth anything anytime soon. but they still have $9000 a month mortgages and $9000 a month wives.
hows that gonna work?
Christopher Dodd should resign in disgrace; the whole premise of the bailout was insulting to taxpayers and the MAJORITY of homeowners alike.