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Freddie spokesman Douglas Duvall confirmed to The Associated Press Friday that the company's management has been in talks with potential investors this week as part of ongoing discussions to raise capital. He declined to give any details about the meetings, possible investors or structures. The Wall Street Journal reported on the talks Friday.
Freddie promised in May to raise $5.5 billion to shore up its finances, but hasn't yet and its declining share price makes raising that money far less feasible.
Investors appear to believe existing common stockholders would get nothing if there is a government bailout, a view Buffett also shares. What remains unclear is whether investors in preferred shares - a type of investment that incorporates elements of both stocks and bonds - will also be wiped out.
On Friday, Moody's cut its ratings on the companies' preferred stock five notches to "Baa3" from "A1." A rating of "Baa3" is one notch above junk status. It also put them on review for possible downgrade, saying they each have limited ability to raise equity. The ratings agency believes the likelihood of government intervention has risen.
Aug. 22 (Bloomberg) -- A failure of U.S. mortgage finance companies Fannie Mae and Freddie Mac could be a catastrophe for the global financial system, said Yu Yongding, a former adviser to China's central bank.
``If the U.S. government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic,'' Yu said in e-mailed answers to questions yesterday. ``If it is not the end of the world, it is the end of the current international financial system.''
Private investors won't touch it now, and if Buffet gives it a thums down, as he did, well, what's left?
Originally posted by jefwane
I think I've heard you say that you work in the real estate industry in some level. I'm hearing that the mortgages that they are currently writing, are some of the best they've done in years. Do ou have any thoughts on that?