Monday, September 08, 2008

Fed takes Control of Fannie Mae and Freddie Mac

Sunday, 9.7.2008, the Federal Government took over Fannie Mae and Freddie Mac in Conservatorship. How did this affect the interest rates today? Well, let me tell you. Bonds soared much higher today, in fact, over 150 basis points higher. Rates actually dropped about .375% in one day. Investors were worried that Fannie and Freddie were going to fail so their stock prices went way down. Now with the Fed taking over, the fear of them failing is now gone, so investors now feel that Fannie and Freddie will continue to be strong and therefore felt comfortable putting money into mortgage backed securities, this giving us the best rates since 3.2008. Let's see how this will pan out in the next coming weeks.....

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