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Sunday, July 13, 2008

Fed To Bail Out 2 Mortgage Giants?

July 10 2008
The anxiety over Fannie Mae and Freddie Mac, crucial to a recovery of the battered housing market and the economy as a whole, took stocks on a wild ride Friday.
An early sell off was fanned by speculation of looming bailout. The stocks recovered on assurances by a leading senator that no rescue is needed.
Immediately after the markets opened, shares of Fannie and Freddie fell more than 47% from their already battered closing price the day before. They soon rebounded later in the morning but Fannie shares were still down about 24% and Freddie shares were off 22% in early afternoon trading. The shares of both companies recovered most of their losses shortly after 2 p.m. when Sen. Christopher Dodd, D-Conn., the chairman of the Senate Banking Committee, defended the strength of both firms.
Dodd said that his discussions with Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson, the regulators who oversee the firms and the two companies' CEOs convinced him they have more than adequate capital and that there was no need to even discuss failure or a bailout.

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