Fannie, Freddie Plunge Gives Short Sellers a Field Day

Very quietly, the sharks are making a killing
By Jason Farago,  Newser Staff
Posted Jul 11, 2008 9:29 AM CDT
In this Nov. 29, 2007 file photo, Richard Syron, chairman and CEO of Freddie Mac, talks about the sub-prime lending crisis.    (AP Photo/Stephan Savoia, file)
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(Newser) – With the rest of the world wringing its hands over fears of a Fannie Mae or Freddie Mac collapse, one tribe on Wall Street is smiling: the short sellers. Investors have bet against Fannie and Freddie in growing numbers as the two mortgage lenders' positions grew more precarious. But handsome returns as the stocks plunged 70% this year have also brought unwanted attention, the New York Times notes.

Not surprisingly, many of the big short sellers dodged inquiries from writer Landon Thomas, as hostility toward Wall Street speculators gains increasing traction in Congress. But one noted short seller who been warning since the late '90s that Freddie and Fannie would be hit hard when the housing bubble finally burst tells Thomas he feels no joy. “I am sickened by this,” he said. "I had the same sick feeling after September 11. Millions of people will suffer.”