This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Fannie Mae, Freddie Mac Plunge: Financial Losers

NEW YORK ( TheStreet) --

Shares of bailed-out housing giants Fannie Mae (FNMA) and Freddie Mac (FMCC) shed more than 12% each as Senators Bob Corker (R- Tenn.) and Mark Warner (D-Va.) introduced legislation aimed at curtailing the government-sponsored enterprises and allowing private capital to have a greater role in the U.S. housing system.

The most liquid junior preferred GSE shares, which have also risen considerably this year, ended modestly lower. Fannie preferred Series S shares (FNMAS), with a face value of $25, closed at $4.94 Tuesday, down about 0.2% .Freddie Mac's preferred Series Z shares (FMCKJ), with a face value of $25, closed at $5.10 Tuesday, down about 1%.

Investors have been betting that the housing heavyweights, which have actually become profitable again, will ultimately repay the government and return to their private forms. Junior preferreds is seen as a better bet than common shares, which figure last in the pecking order of who gets repaid.

Nonetheless, it was a good day for bank stocks. Shares of Citigroup (C - Get Report) and Bank of America (BAC - Get Report) rose Tuesday after central banks around the world moved to reassure investors they will not prematurely raise interest rates.

In the U.S, strong housing data delivered a shot in the arm to markets that have been in turmoil since Federal Reserve Chairman Ben Bernanke said a week ago that the central bank may begin to curb its bond purchases later this year.

Home prices rose 12.1% in the12-months ending in April, according to the S&P Case Shiller 20-City Composite index. The Census Bureau, meanwhile, said new-home sales rose 2.1% in May, higher than expected.

Shares of Bank of America rose 3% to $12.67. Shares of Citigroup rose 3.4% to $47.

Both banks are considered highly levered to the housing recovery, with higher home prices likely to reduce the likelihood of future defaults.

Shares of JPMorgan Chase and Wells Fargo also finished higher by 1%.

--Written by Shanthi Bharatwaj in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
FMCC $1.57 -0.70%
FNMA $1.71 0.00%
BAC $14.80 -1.50%
C $46.73 -1.27%
AAPL $94.64 -3.30%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs