Shares of leading US home lenders plunged on Tuesday after Freddie Mac, the government-sponsored mortgage company, revealed a $2bn loss, its largest ever, and said it would have to raise additional capital to meet its regulatory requirements. Senator Charles Schumer, chairman of the congressional joint economic committee urged the Bush administration to “use all of the tools at its disposal” to address the problem. Freddie, which attributed its losses to rising defaults and credit losses on mortgages, warned of a possible 50% cut in its Q4 dividend and said it had hired Goldman Sachs and Lehman Brothers to help it raise capital – such as through a sale of preferred shares. Freddie shares fell 29%, while those of its larger rival Fannie Mae, dropped 25%.

This entry was posted by Gwen Robinson on Wednesday, November 21st, 2007 at 5:27 and is filed under Capital markets. Tagged with Fannie Mae, freddie mac. Edit this entry.