Penny Stocking Around with Fannie Mae
Fannie Mae (NYSE:FNMA) is nothing more than just another penny stock, not an encouraging sign when U.S. Taxpayers have already thrown $145 billion at Fannie and Freddie (NYSE:FRE). Today Fannie shares spiked up 46% to end the day at a whopping 39 cents.
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Today's move comes thanks to the news that the U.S. Treasury to hold conference on Fannie, Freddie next month. WASHINGTON — The Obama administration, which has been under fire for not developing a concrete plan for mortgage giants Fannie Mae and Freddie Mac, says it will hold a conference next month to discuss their future.
The administration said Tuesday the event will be held Aug. 17 at the Treasury Department.
The financial overhaul signed by President Barack Obama didn't address their future, despite protests from Republicans that it was incomplete without a plan for the two companies. The Obama administration has said it wants to wait until next year to determine their future.
So far stabilizing the pair of mortgage buyers has cost taxpayers $145 billion.
The government created the two companies as a hybrid of a private company and a federal agency to help make mortgages available. They buy home loans from lenders, package them into bonds with a guarantee against default and sell them to investors.
They own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans worth more than $5 trillion.
If you plan on trading Fannie Mae (NYSE:FNMA) shares expect a volatile ride, at this point, its best to just wait out the events of next month before putting any money down on any type of position, long or short.