The Freddie & Fannie Meltdown
Investors turned their backs on home finance goliaths Fannie Mae and Freddie Mac after Freddie, on November 20, posted a surprising third-quarter loss of $2 billion, and said it might have to cut its dividend.
That news cast doubt on the reliability of Fannie's November 9 earnings release, which showed a $1.4 billion loss, and shook the shares of both companies. Fannie dropped by nearly 25%; Freddie tumbled by almost 29% by the end of the day.
Meanwhile, the Commerce Department reported on November 20, that while housing starts overall rose 3% in October, an apparently cheery number, single-family starts fell by 7.4%, and building permits sank 6.6% to the lowest level since July, 1993.
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That news cast doubt on the reliability of Fannie's November 9 earnings release, which showed a $1.4 billion loss, and shook the shares of both companies. Fannie dropped by nearly 25%; Freddie tumbled by almost 29% by the end of the day.
Meanwhile, the Commerce Department reported on November 20, that while housing starts overall rose 3% in October, an apparently cheery number, single-family starts fell by 7.4%, and building permits sank 6.6% to the lowest level since July, 1993.
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posted by Bob Moser at
9:49 PM
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