Bank Profits Hurt by Fannie and Freddie Securities

Published on:
12 September 2006 at 10:19 a.m. ET

Written by: Unknown Author –

http://www.insidearm.com/news/00004866-bank-profits-hurt-by-fannie-and-freddie-s/

Securities issued by U.S. housing finance companies Fannie Mae and Freddie Mac are touted as a safe bet for investors, but some U.S. banks may be thinking otherwise.

Accounting woes and management changes at both housing finance companies have eroded the value of their preferred securities held by many banks.

Banks buy a variety of securities issued by both companies, including agency bonds and preferred securities. Preferred securities attract bank managers because of tax advantages that increase returns, and they were considered a safe investment.

Furthermore, Fannie and Freddie preferreds are the only ones of that type of security that many banks can buy.

For this complete story, please visit Bank Profits Hurt by Fannie and Freddie Securities.

Bank Profits Hurt by Fannie and Freddie Securities

Unknown Author

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