Monday, July 14, 2008
Buyers showed no hesitation in bidding on Freddie Mac’s $3 billion debt sale on Monday, just hours after the U.S. government pledged support for the nation’s top mortgage finance agencies, but the steps failed to stem growing alarm on Wall Street.
Global stock markets had rallied after the Treasury Department and Federal Reserve stepped in on Sunday with offers of richer credit lines, equity purchases and direct access to central bank coffers should Freddie and its sister agency Fannie Mae run into deeper financial trouble.
However, stocks quickly shed initial gains as investors feared the steps will do little stem the losses spreading through the financial sector in the wake of a deflating housing market and stalling economy.
Friday’s failure of mortgage lender IndyMac Bancorp Inc, the third-largest bank collapse in U.S. history, was a pointed and painful reminder of the financial strains. Shares in a host of banks, including National City and Washington Mutual, fell sharply.
“This incident (with Fannie and Freddie) is not the last one,” billionaire investor George Soros told Reuters in a telephone interview, adding that the year-long global financial market turmoil represented “the most serious financial crisis of our lifetime.”
This article was posted: Monday, July 14, 2008 at 2:21 pm