Fannie and Freddie: Gauging the Fallout

More ripples from the rescue: Banks will have to take writedowns, while the Treasury's move may not boost mortgage lending

The government's Sept. 7 bailout of mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) will add much-needed liquidity to the secondary market for U.S. mortgages. But it does little to resolve some bigger problems: excessive housing inventories, home prices that continue to drop, and the likelihood of mounting defaults and foreclosures as the economy worsens, say market analysts.

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