The buzz about another possible bailout of Fannie Mae and Freddie Mac doesn't make any sense, says Dick Bove. Here's why.» Read More
The moves by the two government-sponsored companies, the biggest buyers and guarantors of home mortgages in the country, came in response to the turmoil in the market for so-called subprime mortgages, higher-priced loans for people with tarnished credit or low incomes who are considered greater risks.
Mortgage financier Freddie Mac reported Friday a fourth-quarter net loss, but said that full-year profit rose from a year ago and also said it would boost its share repurchase program.
Whodunit? Amid events like the NYSE's suspension of trade in New Century Financial shares, the subprime mortgage sector is in trouble -- and some are blaming the Federal Reserve. Rick Antonoff, partner at Pillsbury Winthrop Shaw Pittman, took on CNBC's Steve Liesman to debate the question.
Federal Reserve Chairman Ben Bernanke urged Congress on Tuesday to bolster regulation of mortgage giants Fannie Mae and Freddie Mac, and suggested limiting their massive holdings to guard against any danger their debt poses to the overall economy.
Wall Street took its worst beating in four years, as a sell off in the Chinese stock market triggered a global stock selling spree and raised fears of a slowdown in the world economy. "Asia sneezed and we all picked up a global chill," Frederic Dickson, Chief Market Strategist at D.A. Davidson, told CNBC.com.
Freddie Mac, one of the nation's biggest buyers of subprime mortgages, is announcing dramatically tougher standards for purchasing these loans in the secondary market, according to CNBC's Steve Liesman.
The report by Moody's Investors Service about "prime" loans came amid mounting concern about "subprime" borrowers, who have weaker credit histories.
The loss was a contrast to the $880 million gain the company reported for the third quarter of 2005. Freddie said that its business was very sensitive to interest rate fluctuations and that the third-quarter loss came after gains in the first half of the year.