Freddie Mac and Fannie Mae’s stock price fell Monday after surging in early market trading.
Stock prices of the government-sponsored mortgage companies had risen in pre-market trading Monday in response to weekend announcements of plans by the U.S. Treasury and Federal Reserve to back up the government-sponsored enterprises.
McLean-based Freddie Mac’s stock price fell 8 percent to close at $7.11. Its high for the day was $9.80. Washington, D.C.-based Fannie Mae’s stock fell 5 percent to close at $9.73. Its stock was trading as high as $13.50 on Monday.
On Sunday, U.S. Treasury Secretary Henry Paulson asked Congress for authority to buy unlimited shares of the mortgage finance companies. In addition, the Federal Reserve said it gave the Federal Reserve Bank of New York power to lend money to the companies.
The companies own or back almost half of the mortgage debt in the U.S.
Yes, this stock and main index were up before the market opened, but I think people are scared that equity will dwindle if the government take over, and don’t believe in what the company says, similar to Northern Rock in UK ...Hmm, should have shorted this stock after the company auctioned its share to raise money and not many takers!!
--Wayne
Jul. 15, 2008 at 04:03 AM