Stan Muse_

What If Fannie and Freddie Could Go Private? [Housing Tracker]

As I understand it, FNM has a market cap of about $6.5B and is backing $5 Trillion in mortgages. They have about $40B in cash reserves. Doesn't this just seem way out of whack to everyone, given the state of the mortgage crisis? Their cash reserves can only cover 1% of defaults. The defaults are occuring at over 1% per month. How long can FNM possibly survive in their current state? Most of the experts say the mortgage crisis will continue for at least another year. I think we are in for a hell of a meltdown unless the government writes FNM a blank check for over $300B, without knowing if that will even cover until this is over. I just do not see that happening. FNM is a day trade at best, there is no way I would hold a common position over night.