We have written about the market danger posed by government sponsored, yet privately-owned, mortgage behemoths Fannie Mae (FNM) and Freddie Mac (FRE) numerous times in the history of this blog. Here are examples from November 2007, July 2007, and April 2007.

Well, it looks like our continuous calls for a destruction in the viability of these companies is continuing to be on the money. This week Fannie and Freddie have been crashing to new lows on news that their capital position may not be sufficient to survive the mortgage credit crunch. Additionally, the Wall Street Journal is reporting the Treasury Department has stepped up contingency plans for in case one or both of the entities goes down.

Fannie Mae:

Freddie Mac:

Both companies are down over 80% since October 2007. To reiterate, it will pay to be aware of significant potential losses in the U.S. asset classes in the coming months and/or years. Just a heads up.

Filed under: Economics, Current Events