Financial stocks suffered a furiously traded bloodbath Tuesday afternoon following Freddie Mac's ( FRE) announcement of an enormous third-quarter loss .

Freddie shares tanked by more than 28%, and fellow mortgage investor Fannie Mae ( FNM) by nearly 25%, after the former reported a loss of $2 billion, or $3.29 a share. That's nearly triple the amount of last year's loss, which panned out at $1.17 a share.

In light of its dire cash levels, Freddie also said it might cut its dividend in half next quarter and that it's considering "very near term capital raising alternatives" with help from Goldman Sachs ( GS) and Lehman Brothers ( LEH).

Freddie slid $10.76 to $26.74 as Fannie traded down $9.33 to $28.25.

A Fox-Pitt analyst meanwhile argued that, if the foundering Freddie and Fannie can't purchase Countrywide's ( CFC) loans, the mortgage lender's viability of remaining in business will be placed in jeopardy . The analyst cut Countrywide to in line from outperform. Shares finished down 2.7% to $10.28.

Citigroup ( C) saw extremely heavy trading after a Deutsche Bank analyst said that the banking giant's foul-ups, as they regard to risk management and disclosure of subprime-related writedowns, could have opened up a can of regulatory worms. The analyst kept his sell rating on the bank, per the Associated Press, believing that a regulatory probe could be launched on Citi and that new restrictions might limit activities such as buyout pursuits.

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