US mortgage giants shares plummet

Share prices in two of America’s biggest mortgage finance companies have plunged to new lows, prompting fresh rumours of a government bail out.

Freddie Mac and Fannie Mae have again prompted fears a month after a government plan gave the US Treasury the right to rescue the pair if needed.

Fannie Mae’s shares dropped by over 26 per cent on Wednesday, with Freddie Mac Shares falling by more than 20 per cent.

Between them the firms supply or back nearly 50 per cent of all mortgages in America.

Quoted by the Daily Telegraph, a US Treasury spokesman said:

“As you would expect, we have been in communication with the companies for months to receive updates and we’ve been communicating with their regulator and the Federal Reserve.”

Last month the Treasury pledged to back both companies should they face further trouble.

Secretary Henry Paulson has previously released a July 11 statement saying the Treasury’s “primary focus” was to support both firms.

Fannie Mae chief executive Daniel Mudd reassured investors that no government bail out was forthcoming and said the firm’s financial status “remains very strong”.

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