12 Jul 2008

US mortgage company shares slump

9:10 am on 12 July 2008

Shares of America's two biggest mortgage companies slumped by almost a half when trading opened on Wall Street on Friday, fuelling speculation of a government bailout.

Together, the companies Fannie Mae and Freddie Mac control nearly half the US mortgage market.

The price rebounded later in the day, however, over the year, the slide in the the companies' publicly traded shares has been staggering.

Fannie Mae's stock has lost most of its value, falling from peaks around $US70 in August 2007 to their current $US9, and Freddie Mac fared even worse.

The New York Times has reported that senior Bush administration officials are considering a government takeover.

Treasury Secretary Henry Paulson played down that prospect on Friday, but markets took little comfort in his comments, and the situation remained fluid enough that many are still counting on an eventual bailout.