Ban on Fannie and Freddie short selling could prevent another Bear Stearns

The two largest mortgage lenders in the US had to be bailed out by the government this week amid fear...

The two largest mortgage lenders in the US had to be bailed out by the government this week amid fears they were running out of cash. In a bid to save Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation) the US government has banned short selling of Freddie and Fannie’s shares and issued bonds to allow them to borrow from the Treasury. M&G’s bond specialist Jim Leaviss said: “At the moment people don’t know if they are getting government risk or mortgage market risk when they buy these bonds. The market is pricing Fannie’s de...