Local stock watcher Keith Geary told me after the market closed Friday that he was expecting some kind of response to concerns about the solvency of mortgage giants Fannie Mae and Freddie Mac. Looks like
he was right:
The Federal Reserve said it granted the Federal Reserve Bank of New York authority to lend to the two companies "should such lending prove necessary." If the companies did borrow directly from the Fed, they would pay 2.25 percent — the same rate given to commercial banks and Big Wall Street firms.
Meanwhile, the U.S. Securities and Exchange Commission is looking into the origins of rumors like those that slashed the stock price of Fannie Mae, Freddie Mac and, earlier, Bear Stearns. Frankly, there appeared to be nothing particular that sparked Friday's sell-off since traders had been aware of the two mortgage finance companies' debt situation for weeks.
From The Associated Press:
(SEC Chairman Christopher) Cox said the investigation would provide an opportunity to make sure brokers and investment advisers have "appropriate training for their employees and sturdy controls in place to prevent intentionally false information from harming investors."
Geary suggested that a bailout should restore some stability to the stock market.
We'll soon know if he was right about that. To hear more from Geary, the chief executive officer of
Capital West Securities, check out this video.
Don Mecoy
Business Writer