Fannie Mae and Freddie Mac Shares on Their Way to Zero

Fannie Mae and Freddie Mac made the giant crazy sized long running American real estate bubble all possible. Released by congress from capital-ratio requirements and backed with a line of credit at the Treasury, they were able to buy a nearly unlimited amount of mortgages, which kept home mortgage financing flowing to a lot of people who had no ability to repay the mortgages. Today, Freddie or Fannie finance more than 80% of all new mortgages in the United States.

Forex Market Implications of Fannie Mae and Freddie Mac

Growing fears on the part of stock investors and forex traders that mortgage backers Fannie Mae and Freddie Mac may collapse and have to be taken over by the US government contributed to a wild trading day in the US stock market and the forex market on Friday.

Fannie Mae and Freddie Mac shares have been hammered this year as the mortgage and US housing market crisis have become worse and worst witrh no end in sight. Together Fannie Mae and Freddie Mac insure almost fully 50% of the mortgages on American homes which runs into the many trillions of dollars. The two implicitly US government backed companies have had their shares prices hammered over the past year as losses on their loan portfolios mount. Their shares have now lost over 75% of their value and may not have bottomed out even at truly distressed prices.