Fannie, Freddie Shares Plummet on Capital Worries
Shares of Fannie Mae and Freddie Mac, the largest providers of funding for U.S. home mortgages, closed at their lowest levels since 1992 on concern the companies need to raise more capital amid larger-than-expected losses.
Freddie Mac, Fannie Mae Plunge on Capital Concerns (Update4)
July 7 (Bloomberg) -- Freddie Mac and Fannie Mae fell to the lowest in 13 years in New York Stock Exchange composite trading as concerns grew the two largest U.S. mortgage-finance companies may need to raise more capital to overcome writedowns and satisfy new accounting rules.
Freddie Mac fell 18 percent and Fannie Mae dropped 16 percent after Lehman Brothers Holdings Inc. analysts said in a report today that an accounting change may force them to raise a combined $75 billion. Speculation that the companies may take further writedowns also weighed on the stock, said John Tierney, a credit strategist at Deutsche Bank AG in New York.
"There's a lot of apprehension about writedowns," Tierney said. "If they have writedowns, they have to raise capital. How much do they raise and how easily can they do that? Those are the questions that everybody is asking."
Shares in Fannie and Freddie tumble
Shares in Fannie Mae and Freddie Mac plunged on Monday as investors worried that the two giant government-sponsored mortgage financiers would have to raise fresh capital.
Fannie and Freddie shares were down by as much as 18 per cent and 23 per cent, respectively, at the peak of the sell-off after a Lehman Brothers analyst said an accounting change could, in theory, force the two biggest US mortgage financiers to raise an additional $75bn in capital.
Yeah, good luck with that.
Everyone out there is having to raise capital.
Educate yourself!
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