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| Version 9 | Version 10 |
|---|---|
| US mortgage firms' shares slump | US mortgage firms' shares slump |
| (about 1 hour later) | |
| Shares in US mortgage firms Freddie Mac and Fannie Mae dropped by as much as 50% in rollercoaster trading on Friday amid concerns for their future. | Shares in US mortgage firms Freddie Mac and Fannie Mae dropped by as much as 50% in rollercoaster trading on Friday amid concerns for their future. |
| Investors are concerned that the government may have to step in to rescue the two firms. | Investors are concerned that the government may have to step in to rescue the two firms. |
| But the US Treasury said it would back them in their current form, helping their shares to recover some ground. | But the US Treasury said it would back them in their current form, helping their shares to recover some ground. |
| The companies are behind half of all US mortgages and have been hard hit by the slowdown in the US housing market. | The companies are behind half of all US mortgages and have been hard hit by the slowdown in the US housing market. |
| The two companies play an important role in the financial markets in providing funding for home loans by buying up mortgages and packaging them as investments. | The two companies play an important role in the financial markets in providing funding for home loans by buying up mortgages and packaging them as investments. |
| As mortgage backers, the companies have had to pay out when homeowners have defaulted on their loans. | As mortgage backers, the companies have had to pay out when homeowners have defaulted on their loans. |
| 'Important mission' | 'Important mission' |
| Shares in the two firms trimmed losses after US Treasury Secretary Henry Paulson signalled he was not on the verge of taking Fannie Mae and Freddie Mac into public hands. | Shares in the two firms trimmed losses after US Treasury Secretary Henry Paulson signalled he was not on the verge of taking Fannie Mae and Freddie Mac into public hands. |
| President Bush reflects on tough times for the US economy | President Bush reflects on tough times for the US economy |
| "Our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission," he said. | "Our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission," he said. |
| President George W Bush was briefed on Fannie Mae and Freddie Mac earlier on Friday. | President George W Bush was briefed on Fannie Mae and Freddie Mac earlier on Friday. |
| Mr Bush said Mr Paulson assured him that he and Federal Reserve Chairman Ben Bernanke "will be working this issue very hard". | Mr Bush said Mr Paulson assured him that he and Federal Reserve Chairman Ben Bernanke "will be working this issue very hard". |
| After a volatile trading session, Freddie Mac shares closed down 3.1% at $7.75. | After a volatile trading session, Freddie Mac shares closed down 3.1% at $7.75. |
| The stock had plunged as much as 51% shortly after the market opened and briefly vaulted into positive territory at one point. | The stock had plunged as much as 51% shortly after the market opened and briefly vaulted into positive territory at one point. |
| Shares of Fannie Mae ended the day down 22.4% at $10.25 after sliding as much as 49% to a 19-year low of $6.68. | |
| US Senator Christopher Dodd said the Federal Reserve was considering allowing Fannie Mae and Freddie Mac to borrow directly from the central bank, which also helped the shares to recover. | US Senator Christopher Dodd said the Federal Reserve was considering allowing Fannie Mae and Freddie Mac to borrow directly from the central bank, which also helped the shares to recover. |
| 'Unthinkable' | 'Unthinkable' |
| There has been a sense of unfolding crisis surrounding the companies this week according to the BBC's New York business correspondent, Greg Wood. | There has been a sense of unfolding crisis surrounding the companies this week according to the BBC's New York business correspondent, Greg Wood. |
| Today our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission Treasury Secretary Henry Paulson Q&A: Freddie Mac and Fannie Mae | Today our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission Treasury Secretary Henry Paulson Q&A: Freddie Mac and Fannie Mae |
| He added that it would be unthinkable that they could be allowed to fail. | He added that it would be unthinkable that they could be allowed to fail. |
| While no longer government owned, Fannie Mae and Freddie Mac are government chartered, leading many to suggest that the Bush administration will be forced to step in. | While no longer government owned, Fannie Mae and Freddie Mac are government chartered, leading many to suggest that the Bush administration will be forced to step in. |
| 'Important mission' | 'Important mission' |
| Mr Paulson responded to media reports that the Treasury was planning some kind of government-led rescue. | Mr Paulson responded to media reports that the Treasury was planning some kind of government-led rescue. |
| He said the Treasury was "maintaining a dialogue with regulators and with the companies". | He said the Treasury was "maintaining a dialogue with regulators and with the companies". |
| He stressed that their regulator continued to work with them "as they take the steps necessary to allow them to continue to perform their important public mission". | He stressed that their regulator continued to work with them "as they take the steps necessary to allow them to continue to perform their important public mission". |
| Analysts said his comments suggested that there would be no sweeping bail-out of the two firms. | Analysts said his comments suggested that there would be no sweeping bail-out of the two firms. |
| "While Mr Paulson is making supportive comments... there was no suggestion of any imminent bail-out - nor enough specifics to the support they would give," said Bret Barker, portfolio manager at Metropolitan West Asset Management in Los Angeles. | "While Mr Paulson is making supportive comments... there was no suggestion of any imminent bail-out - nor enough specifics to the support they would give," said Bret Barker, portfolio manager at Metropolitan West Asset Management in Los Angeles. |
| "The markets were looking for more from Mr Paulson." | "The markets were looking for more from Mr Paulson." |
| Earlier this week, Freddie Mac and Fannie Mae's regulator stressed that the firms were "adequately capitalised". | Earlier this week, Freddie Mac and Fannie Mae's regulator stressed that the firms were "adequately capitalised". |
| This sentiment was also echoed by Mr Paulson and Mr Bernanke in testimony to the US Congress on Thursday. | This sentiment was also echoed by Mr Paulson and Mr Bernanke in testimony to the US Congress on Thursday. |
| The Office of Federal Housing Enterprise Oversight said they had large liquidity portfolios, access to the debt market and over $1.5 trillion in unpledged assets. | The Office of Federal Housing Enterprise Oversight said they had large liquidity portfolios, access to the debt market and over $1.5 trillion in unpledged assets. |