Fannie And Freddie Panic
CBS
Transcript
they are all over the news tonight but who are Fanny May and Freddy Mack well they're two huge companies chartered by the government to make mortgage money available to people who want to buy homes in fact they hold or guarantee nearly half of America's trillion do in mortgages but now with housing values plunging they're in danger of running out of money the very thought of that Shook Up Wall Street today the Dow posted a triple digit loss Anthony Mason is our business correspondent Anthony the potential impact of all this is pretty devastating isn't it it is indeed Katie despite their funny names these two companies aren't just pillars of the housing market they help hold up the entire economy that's why there were signals this afternoon that the FED in an emergency move may offer low rate loans to Fanny May and Freddy Mack to stop what was shaping up as a panic the stocks of Fanny May and Freddy Mack were in freef fall this morning at one point both were down more than 40% wall Street's worry are going to lose so much money on the mortgages they've written that their stocks will now become worthless together the two companies have lost1 billion in just 9 months they still have more than $80 billion in the bank but investors aren't sure that will be enough to cover their losses they become the backbone the financial backbone of the Home Mortgage industry when you buy a house you take out a loan from A bank the bank will then sell that loan to Fanny or Freddy who in turn repackage the mortgages and sell them to investors they also guarantee the mortgages will be repaid it's the grease that keeps the housing market moving together Fanny May and Freddy Mack own or guarantee about half of the mortgages issued in this country and it would be almost impossible to get a loan if they went under if they did the mortgage Market would break down and it would be 1929 we we would go from a recession into a depression set up by the government 70 years ago in in the wake of the Great Depression the Federal National Mortgage Association as Fanny May was first known was created to help make homeownership more accessible this Title Wave of new construction is an important contribution to the economic rebuilding of America Freddy Mack was established in the 70s to compete with Fanny and Home Ownership has exploded as a result without Fanny May and Freddy Mack the modern American economy simply can't function they are as fundamental to us prosperity is the existence of the Federal Reserve the stocks did rebound somewhat this afternoon but Katie both are still off 75% this year
Fannie & Freddie near collapse; U.S. weighs takeover
CBS
Transcript
Fanny may and Freddy but the Giant companies at the Heart of the nation's crumbling housing Market might be in Trouble the government back Company owner guarantee roughly Half of the nation's 12 trillion mortgage Market Now there are Serious worries on Wall Street They may not have enough Capital to make up for the tumbling Value of the loans They hold now the government reportedly is considering a takeover of both companies to Bail them out shares of the two companies Which Drop sharly this week plummeted in Market Trading on the news meanwhile General Electric Met Wall Street expectations with a 6% decline in profits last Quarter to 5 billion as the industrial Giant says It's Fighting Against a Bur Us consumer and Toyota Is going to start building ITS Popular gas Electric Hybrid Prius in the Us auto analysis Say it makes sense to produce the Hybrid here because it's the biggest market for the car The falling Dollar also has lowered production costs in the United States making assembly of the Prius in America Less expensive Toyota Will Start making the Prius by 2010 at ITS Plant in Blue Springs Mississippi and that's your Money Watch log on cbsnews.com for more in New York CL
Parties Unite To Save Homes
CBS
Transcript
in other news this morning the Senate is expected to pass a massive mortgage rescue bill today the plan has the federal housing Administration giving struggling homeowners $300 billion doar in new loans with more affordable fixed rate mortgages the bill still faces lots of work in the house there are new worries this morning about the worsening housing market there are reports the government is considering bailing out giant mortgage finance companies Fanny May and Freddy Mack D Bolton the Bloomberg television has more this morning de good morning to you good morning Chris well those mortgage Finance companies Fanny May Freddy M as you said too big to let fail that's what politicians on both sides of the aisle are saying so in a rare instance Democrats and Republicans are speaking in unity Republican senator and presidential candidate John McCain said yesterday if Fanny May Freddy Mack must not fail Democratic senator Chuck Schumer said the markets must be assured that the government will stand by Fanny May and Freddy Mack the two companies together they own or guarantee about half of the 12 trillion dollar worth of all mortgages in the US so the majority of American homeowners are affected by what happens to them according to people familiar with the matter there is a possibility that the government takes over the companies because if they fail the worst housing crisis since the Great Depression could get even worse more problems for those two companies mean it gets even harder and more expensive for the average American to get a mortgage Chris what to you Bloomberg television zra Bolton thank you d