Fannie, Freddie Rise After Lawmakers Agree on Bill

July 23 2008 - Fannie Mae and Freddie Mac rose after U.S. lawmakers reached a deal on legislation that authorizes Treasury Secretary Henry Paulson to bail out the mortgage-finance providers while placing few restrictions on the companies.

Fannie Mae gained as much as 27 percent and Freddie Mac added 18 percent in New York Stock Exchange composite trading.

The House of Representatives is set to vote today on the rescue plan for Fannie Mae and Freddie Mac as part of a bill aimed at alleviating the worst housing slump since the Great Depression. Legislators crafted the agreement nine days after Paulson asked for powers to inject capital into Fannie Mae and Freddie Mac to enable them to continue buying mortgages.

“It is good news if you own Fannie and Freddie stocks,” said Brian Battle, Vice President of Trading at the Chicago-based brokerage Performance Trust Capital Partners. “Fannie and Freddie will exist as they are now and will get bigger because Congress wants them to do something about the housing market, so that’s good for Fannie and Freddie.”

Fannie Mae added $2.66 to $16.07 at 10:19 a.m. in New York. Freddie Mac added $1.40 to $11.10.

Fannie Mae is down about 66 percent this year, and Freddie Mac about 72 percent, declines that began amid speculation the companies may not have the capital to survive. Both traded above $60 a share last year.

Fannie, Freddie Rise After Lawmakers Agree on Bill
by Bryan Keogh and Dawn Kopecki | Bloomberg