The crisis gripping Fannie Mae and Freddie Mac spread on Monday as JPMorgan Chase warned of a possible $600m loss from its holdings of preferred shares in the two mortgage financing groups. JPMorgan said it would write down the value of its $1.2bn of preferred shares in Fannie and Freddie by half. Banks and insurers own most of the $36bn in preferred stock in Fannie and Freddie, and JPMorgan’s move will raise pressure on other holders to make similar writedowns. Also on Monday, Freddie easily sold $2bn of short-term debt, helping to reassure investors that Freddie and Fannie can still fund their operations without a government bailout.

This entry was posted by Gwen Robinson on Tuesday, August 26th, 2008 at 5:23 and is filed under Capital markets. Tagged with Fannie Mae, freddie mac, jpmorgan. Edit this entry.