Freddie's Results Sink GSE Stocks

Fannie Mae and Freddie Mac saw their share prices fall precipitously in the wake of Freddie's third quarter loss.At the end of the day, Freddie Mac was down $10.76, or 29%, to close at $26.74. Rival Fannie Mae, which slid last week amid news reports that an accounting change could be masking further credit losses, fell by $9.33 on Tuesday, or 25%, closing at $28.25. The shares of both government-sponsored enterprises are now trading at less than half their prices as recently as mid-August and at their lowest level in more than a decade. Also Tuesday, rating agency Standard & Poor's lowered its outlook on Freddie Mac's subordinated debt and preferred stock ratings to "negative," while reaffirming its triple-A senior debt ratings.

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