Freddie Mac announced higher-than-expected losses for the second quarter on Wednesday. The losses, to the tune of $821 million, cause significant downward pressure on its shares.
For better or for worse, this news comes on the heals of the newly forged "Housing and Economic Recovery Act of 2008" which contains rescue provisions for the troubled Freddie Mac and Fannie Mae institutions.
Many fear this is the beginning of a long and expensive tax expense as the Treasury Department has been authorized to loan an unlimited amount of capitol to Freddie and Fannie, as well as buy their shares if the need should arise.
Freddie Mac and Fannie Mae provide critical liquidity for the banking industry and are generally seen as stabilizing elements in US lending.
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