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.