The government takeover of Fannie Mae and Freddie Mac will have far-reaching economic effects. For example, hedge funds that bet against the two companies have already seen windfall profits as the stock prices of both companies plummeted over the weekend, while the financial institutions that invested in the nearly $5 trillion in mortgages and mortgage-backed securities that FNM and FRE guarantee can breathe a sigh of relief. The government bailout should help avoid a global financial crisis - but it might not help all of the Real Estate Investment Trusts (REITs) that depend on loans from Fannie and Freddie to finance their growth.
More on this topic
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Freddie, Fannie Notable Comments (Mainly Not Pretty)
(naked capitalism, 9/7/08)
Bye Bye Banks: Freddie and Fannie Preferred Holders to Take Big Hits?
(naked capitalism, 9/6/08)
REITs and the Survival of Fannie Mae and Freddie Mac
(The Wikinvest Daily Angle, 9/9/08)
