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November 23, 2008 2:53:41 CST

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Fannie, Freddie Edge Back From the Brink

Posted Jul 12, 08 7:11 CDT in Business 

(Newser) – Fears of a collapse of Fannie Mae or Freddie Mac finally eased yesterday after a stomach-churning rollercoaster ride that saw a 50% nosedive for the mortgage giants in early trading, writes the Wall Street Journal. A week of panic, prompted in part by reports that the government was preparing rescue scenarios, seem to have abated, as Fannie and Freddie were able to continue their regular borrowing. But a bigger test looms Monday when Freddie is due to sell $3 billion of short-term debt.

Henry Paulson moved to assure investors the giants would not be nationalized even if they had to be rescued; insiders tell the Journal that the treasury secretary is keen to ensure a taxpayer bailout doesn't benefit shareholders. Things could turn ugly if the sale Monday fails. The week-long crisis of confidence cost Fannie and Freddy  stocks nearly half their value.

Sources: Wall Street Journal, Wall Street Journal, New York Times

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Fannie Mae on Wisconsin Avenue, in northwest Washington, Friday, July 11, 2008. Shares of Fannie Mae and Freddie Mac sank, then recovered somewhat, on a gut-wrenching Friday.   (AP Photo/Manuel Balce Ceneta)
Traders work on the floor of the New York Stock Exchange on Friday, July 11, 2008 in New York.   (AP Photo/Jin Lee)
A trader watches a monitor while working on the floor of the New York Stock Exchange on Friday, July 11, 2008 in New York.   (AP Photo/Jin Lee)
A trader talks on the a phone while working on the floor of the New York Stock Exchange on Friday, July 11, 2008 in New York.   (AP Photo/Jin Lee)
A trader watches a monitor while working on the floor of the New York Stock Exchange on Friday, July 11, 2008 in New York.   (AP Photo/Jin Lee)
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Financial Crisis • bailout • Wall Street • Henry Paulson • Fannie Mae • Freddie Mac • credit market • mortgage • markets


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