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 and Freddie to Shrink No More: FHFA's Watt

Fannie and Freddie story updated from 11:49 a.m. with share price and comments from Jefferies analyst Furtado.

NEW YORK ( TheStreet) -- Fannie Mae  (FNMA) and Freddie Mac  (FMCC) common and preferred shares were higher Tuesday following a speech by their chief regulator, Federal Housing Finance Authority Director Mel Watt.

Fannie Mae common shares were up 9.91% to $4.66 Tuesday afternoon and Freddie Mac common shares were up 8.57% to $4.56. Fanie Mae "S" series preferred shares were up 4.98% to $10.97.

Michael Kao, head of hedge fund Akanthos Capital and a longtime investor in Fannie and Freddie explained the action in the shares by pointing to comments by Watt that he no doesn't believe it is his job to shrink the market shares of the government sponsored mortgage giants.

In an email exchange with TheStreet, Kao described Watt's comments as a "stark about face to the [Obama Administration's] previous show of support to Johnson Crapo."

Johnson Crapo is legislation aimed at winding down Fannie and Freddie. Watt said Tuesday he wouldn't comment on the bill, which is expected to pass the Senate Banking Committee in a vote set for Thursday but is widely viewed as lacking support to become law.

"If this bill stalls, as is currently expected, it is difficult for us to see how the status-quo of GSE dominance is reduced over the intermediate term," wrote Jefferies analyst Daniel Furtado in a follow-up report to Watt's remarks Tuesday.

Ahead of Watt's remarks, the FHFA announced it would make it easier for banks and other mortgage originators to avoid legal claims from Fannie and Freddie.

Follow @dan_freed




Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts 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
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
FNMA $2.82 0.00%
FMCC $2.68 0.00%
AAPL $124.75 0.00%
FB $80.78 0.00%
GOOG $524.05 0.00%


DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs