Freddie Mac: We have enough capital

With news that Freddie Mac has to be bailed out by the U.S. Government, a spokeswoman from the bank has come out to say “Freddie Mac absolutely has enough capital.” The bank still has to do their bit in raising additional capital, in a time when money is hard to come by.

Freddie Mac said back in the spring that they need to raise $5.5 billion in new capital; this will have to be done with the sale of common shares. Well they will have a tough time doing this now, as of Thursday the banks shares fell by almost 22 percent on the New York Stock Exchange; their stocks were only worth $8.06 at that point.

According to Reuters, in three days out of four, Freddie Mac’s shares had fallen largely and their larger counterpart, Fannie Mae did not fair much better either, both falling by double digits, their shares are now at their lowest level since 1991.

The losses for both banks are highlighting the turbulent market that we are now in, and it is these two companies that the U.S. Government relies on to raise billions of dollars in capital in the financial markets.

The worrying fact is how much longer can these two banks keep going while they keep losing money.