Article: Investor Jitters Deflate Fannie, Freddie Shares; Drop to 20-Year Low Follows Speculation About a Rescue

Shares of Fannie Mae and Freddie Mac tumbled more than 20 percent yesterday, hitting their lowest levels in nearly two decades, as investors fled out of fear that a government initiative to save the ailing mortgage giants could render their stock worthless.

The stock sell-off came a day after Freddie Mac was forced to pay an unusually high interest rate on five-year notes to entice investors to purchase its debt.

While the companies continue to insist that their fundamental finances are sound, investor confidence in Fannie Mae and Freddie Mac has taken a pounding this week as speculation about a federal government bailout has gained pace in the news media and among market analysts.

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