By John Spence
Freddie Mac shares nearly doubled in early trading Monday,
rallying after the mortgage-finance giant reported a quarterly
profit and said it won't have to hit up the government for more
financial assistance, at least for now.
Freddie Mac (FRE) rallied 80% to start the week. Shares of
Fannie Mae (FNM), which with Freddie Mac has been placed in
government conservatorship during the credit crunch, were along for
the ride, gaining about 30%.
In the broader financial sector, the Financial Select Sector
SPDR Fund (XLF) rose fractionally in morning action.
One notable mover to the upside Monday was another bailed-out
financial giant, American International Group Inc. (AIG), which
rose for the fourth straight session after more than doubling last
week. Shares of AIG, the insurance company that is roughly 80%
owned by U.S. taxpayers, was up 8% at last check.
Another standout from last week's rally in financial stocks,
Citigroup Inc. (C), also saw its shares get off to a strong start
to the week.
Conversely, shares of Allied Capital Corp. (ALD) slipped nearly
10% after the business-development company reported a slimmer
second-quarter loss but warned its profitability will be reduced
and that it would not be able to pay a cash dividend for "an
extended period of time."
Meanwhile, shares of Maguire Properties Inc. (MPG) fell more
than 15% after the real estate investment trust said its
second-quarter loss deepened on lingering woes in the commercial
real estate market.
Shares of regional bank Marshall & Illsley Corp. (MI) were
roughly flat after the company said it would be adjusting
second-quarter financial results based on the sale of a pool of
mostly non-performing loans.
The Milwaukee-based bank sold about 800 residential mortgage
loans with unpaid principal balance of $297 million. The sale
resulted in additional charge-offs of $151 million, yielding a
second-quarter loss of 83 cents a share.
In other banking news, U.S. banks are positioned to reap a
record $38.5 billion from customer overdraft fees this year, nearly
double those reported in 2000, the Financial Times reported.
The biggest chunk of the fees is coming from the most financial
stretched consumers, according to the newspaper. The median bank
overdraft fee has risen to $26 from $25 this year, the report
said.
-John Spence; 415-439-6400; AskNewswires@dowjones.com