Shares of mortgage-finance companies Fannie Mae and Freddie Mac fell to their lowest levels in over 18 years as investors increasingly believe that the stocks will drop to zero if the U.S. government bails out the troubled companies. Freddie Mac executives are meeting Treasury Department officials on Wednesday, possibly to ask how the government will support the company and to reassure investors, the Wall Street Journal reported. A Treasury spokeswoman, however, said that while the department is in regular contact with the government-sponsored companies, she declined to confirm whether it was meeting with Freddie Mac officials. Worries about the two companies have risen in recent days following a weekend report in financial weekly Barron's that government officials may have no choice but to nationalize Fannie and Freddie. Fannie Mae's chief executive sought to reassure investors that no government bailout was imminent. “They haven't offered anything, and we haven't asked for anything,” Daniel Mudd said in a radio interview early Wednesday. “I don't anticipate that they will do that.” The two government-backed companies, the largest source of funding for home mortgages in the United States, have struggled with soaring losses from mortgage defaults. Fannie and Freddie lost a combined $3.1 billion between April and June, and investors fear the losses will continue to grow.
