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(Updated with recent stock prices)



) --

Fannie Mae



Freddie Mac


shares were falling Tuesday after their former regulator predicted they are never going to fully repay their debts to the U.S. government.

James Lockhart, the former director of the Federal Housing Finance Agency and currently a vice chairman at W.L. Ross, appeared Tuesday on


's "Squawk Box" program to discuss the likelihood that Fannie, Freddie and


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would repay their government debt.

After rising initially, shares of Fannie and Freddie recently were falling 6.8% to $1.65 and 3.6% to $1.90, respectively.

Though he declared himself "not an expert on AIG's ability to pay," he did note that the firm has assets it can sell off in an attempt to accomplish that goal. That stands in contrast to Fannie and Freddie, which Lockhart said were allowed by Congress to be leveraged over 100 to 1.

"I've said and I continue to say that unfortunately the U.S. will probably not be repaid for its full investment in Fannie and Freddie," Lockhart said. He also predicted that the small profit Freddie reported in the last quarter will not continue.

Speculators have driven the stocks of both Fannie and Freddie up more than 150% in the last month, and both companies' shares were up on Tuesday morning, along with other distressed financials


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CIT Group

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. AIG shares were an exception, down more than 9% recently.


Written by Dan Freed in New York