Stock values of Fannie Mae and Freddie Mac plunged from their all time highs today to less than $1 a share. For many in real estate the concern is our real estate sales and potential commissions, but reality has a lot broader implications that could harm our real estate businesses for sometime to come. As a business we need to focus on more htna just cheap mortgage rates, and more closings. We need to take a look at how this may start to impact our local communities. The biggest holders of Fannie Mae and Freddie Mac preferred shares, and common shares are other banks, pension funds, and insurance funds. Those losses can be our losses. A few articles I've read this evening talked about how some smaller banks owned over $60 million in shares that are basically worthless. Not only have they had a major loss on their investment, it now places the banks at risk while the Federal Government keeps minimizing the losses.
It is easy to minimize a loss if it isn't your money, but if it was your stock portfolio that was lost, or your bank thrown under a bus many of us could be put into dire straights. Get ready for new waves of bank write downs - for many banks they will be in the billions. We need to start seing this for what it really is.
Excellent post. We'll not know where this is going for at least a few days, but it's probably not going to be good.