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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Is Now the Time for US REITS
(Buying Value, 3/14/10)
Increasing Dividend Yield Part II: REITs
(Dividends Value, 3/10/10)
Freddie Mac Says Lever it Up!
(REIT Wrecks, 3/9/10)
