Who the hell started this rumor that's quickly becoming a self-fulfulling prophecy? Though I do see the New York Times' usual impeccable journalism here...
From all I've been able to gather, neither is near insolvent, but the NYT's reporting has torpedoed the shareholder value. Isn't that like yelling "Fire" in a crowded theater?
BOSTON -- Shares of mortgage giants Fannie Mae and Freddie Mac were down sharply once again in premarket trading Friday after a report the government is considering a possible takeover of the beleaguered companies.
Freddie shares lost more than 32% at last check in preopen dealings, while Fannie slipped 28%.
Senior Bush administration officials are weighing a plan that would see the government take over one or both of the companies if a recent deluge of problems worsen, the New York Times reported Friday.
Citing unnamed people who have been briefed on the plan, the report said the plan would place the companies in a conservatorship, under which the shares of Fannie (FNM: FRE 8.11, -2.15, -20.9%) would be worth little or nothing. Any losses on mortgages owned or guaranteed by the two government-sponsored enterprises would be paid by taxpayers.
Of course, the socialists would be overjoyed. A vast conversion to Government Housing in a single sweep.
