WHAT ABOUT FANNIE MAE & FREDDIE MAC? 3: Out of the hole

With the pronouncements from the Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson that credit lines of Fannie & Freddie would be increased and, if still needed, Congress would be requested to allow the Treasury to buy shares in both companies, the financial storm appears to be subsiding.

Even as both companies face mounting losses due to borrowers’ delinquencies, rising foreclosures, and pressure from the government to take on more exposure in the mortgage market to stabilize the housing sector, the week of 14 July saw the stocks of both companies climb more than 15%. Freddie Mac’s recent sale of 2-year notes was well received. Newspapers report that Fannie Mae CEO, Daniel Mudd, declared that Fannie probably would not need to tap the emergency credit arranged by the Treasury.

Are Fannie Mae & Freddie Mac going to live happily ever after?

info from http://www.ofheo.gov/newsroom.aspx http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm and http://www.freddiemac.com/news/archives/corporate/2008/20080713_statement.html

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