Fed mortgage bailout soon, analysts say

WASHINGTON, Aug. 20 (UPI) -- Investors say a U.S. Treasury move to bail out two huge government-sponsored mortgage lenders is only a matter of time.

Confidence in the ability of the Federal Home Loan Mortgage Corp. and the Federal National Mortgage Association to raise cash through investors or borrowing is eroding, The New York Times reported Wednesday.

Freddie Mac and Fannie Mae have lost a combined $14 billion in the past year. Shares have fallen more than 85 percent since December and more than 24 percent since Tuesday, the Times reported.

As their positions worsen, the firms are paying higher insurance costs and the market for their debt is waning.

European and Asian investors are buying smaller portions of the firms' debt. Russian Finance Minister Alexei Kudrin said Tuesday Russia was still buying but not as much as in the past.

The U.S. Treasury denies there is a plan to pump cash into the two enterprises but investors said they feel a bailout is near.

U.S. Treasury Secretary Henry Paulson Jr. "can play this game for as long as he wants but the end is becoming visible," William Gross, the chief investment officer of money management firm Pimco told the Times.