Concern over Fannie Mae and Freddie Mac combined with rising oil prices has helped push the Dow below the 11,000 mark for the first time in over two years. Shares of Fannie Mae and Freddie Mac have plunged nearly 50% today. The AP reports that investors were not impressed with remarks by Treasury Secretary Henry Paulson. Some investors were hoping for a government bailout.
Investors seemed unimpressed by a statement from Treasury Secretary Henry Paulson, who said the government's focus is ensuring that Fannie Mae and Freddie Mac remain as presently constituted to carry out their mission.
The government-chartered companies at times each lost more than 40 percent on growing speculation that a government bailout is needed. A collapse of the two financiers would cause further shock to the financial system, and trigger more losses to banks and brokerages with significant holdings of mortgage-backed securities.
The troubles at Fannie Mae and Freddie Mac are just the latest depressing turn in a year-old credit crisis that shows no sign of ending, disappointing stock traders who just months ago who thought the worst was perhaps over.
The Dow fell as low as this morning 10,980.37. The last date the Dow traded below 11,000 was on July 25, 2006. Since falling below the 11,000 mark the Dow has climbed back just barely above it again.
Oil prices also remain near record highs. Concern that Israel may launch an attack on Iran are helping to boost oil prices.
Concern over Fannie Mae and Freddie Mac combined with rising oil prices has helped push the Dow below the 11,000 mark for the first time in over two years. Shares of Fannie Mae and Freddie Mac have 