Treasury Secretary Paulson has carried his miraculously successful strong dollar policy over to Fannie Mae (FNM) and Freddie Mac (FRE) with this Statement on Fannie, Freddie.

Secretary Henry M. Paulson Jr. made the following comment today on news stories about “contingency planning” at Treasury:

“Today our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission.

“We appreciate Congress’ important efforts to complete legislation that will help promote confidence in these companies. We are maintaining a dialogue with regulators and with the companies. OFHEO will continue to work with the companies as they take the steps necessary to allow them to continue to perform their important public mission.”

If that does not help things I sure don’t know what will.

Sadly, it appears the market was expecting something a bit more robust. It’s looking more and more like the Freddie Fannie and Freddie Waterfalls Are Too Big to Bail.

Fannie is off another 29% today and Freddie another 24% and those numbers are well off the lows. Equity shareholders are getting wiped out as suggested in We’re All Homeowners Now, Nationalization of Fannie, Freddie Unavoidable.

Mike “Mish” Shedlock
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