Talk about a sh*tkicking. Not just for investors, but many banks and mutual funds were holding both. Many mutual fund investors had them in their RSPs and RIFs and probably didn't even know it.
Both companies hold around half of the $12 trillion of mortgages in the U.S. and they went belly-up! How could they run out of money?
It's kind of funny in a sick way. A couple of weeks ago the media was celebrating when Freddie Mac raised $2 billion in financing. \
Well, both Fannie and Freddie have $230 billion in debt that is coming due by the end of the quarter!
That's like feeding an elephant a box of Kraft Dinner and hoping it helps!
But here's the scary part.
There's $871 billion in debt coming due by the end of the year by other financial institutions!
Roger Biduk is an investment advisor for Union Securities and has no position in the above-mentioned companies.
rogerbiduk@rogerbiduk.ca
www.rogerbiduk.cs
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