Freddie Mac finds investors balking

Washington -- The shadow of a possible bailout at the Federal Home Loan Mortgage Corp. in Washington is hindering executives' efforts to raise capital, analysts said.

"Senior management has been talking with a wide array of possible investors this week," Freddie Mac spokesman David Palombi told The Wall Street Journal.

But investors are concerned the U.S. Treasury may act on its new powers to purchase Freddie Mac equity and undermine their own investments, the Journal reported.

Freddie Mac has said it would try to raise $5.5 billion. But, the question at large is how shareholders would be affected if the Treasury decided to come to the rescue of the troubled mortgage firm.

In July, Congress granted the Treasury new powers to purchase equity in Freddie Mac and Fannie Mae or to extend their lines of credit.

The Treasury declined to comment to the Journal about how private shares would be affected and has been guarded about its decision of whether will move to assist Freddie Mac and the Federal National Mortgage Association, Fannie Mae.

Shares in the mortgage brokers have lost 90 percent of their value in the past year, the Journal reported.

Copyright 2008 by United Press International.