Reply #7: Fannie, Freddie capital raising options uncertain

[ozymandius]

NEW YORK - As mortgage financiers Fannie Mae and Freddie Mac struggle with continuing credit losses, their ability to raise needed capital is uncertain and, analysts say, is complicated by the possibility of a government bailout of the two companies.

"We're in uncharted water with this," Bert Ely, an Alexandria, Va.-based banking industry consultant and longtime critic of Fannie and Freddie, said Tuesday.

Published reports about a possible bailout, continued quarterly losses at Fannie and Freddie and further deterioration in the credit markets have investors concerned about the mortgage companies' solvency. Those worries have sent the companies' prices tumbling, with Fannie falling another 4.49 percent and Freddie sliding 5.01 percent on Tuesday.

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Fannie's market capitalization is about $6.58 billion. Friedman, Billings & Ramsey Co. analyst Paul Miller estimates Fannie needs to raise between $5 billion and $10 billion in new capital.

But the prospect of government help has been one of the greatest hang-ups in efforts to raise capital from other investors.

http://news.yahoo.com/s/ap/20080820/ap_on_bi_ge/fannie_freddie_capital