Shares of Fannie Mae (OTC: FNMA) soared 20% in today�s trading, reaching $.81 mid-morning on word the mortgage company on Wednesday plans to sell $1 billion of three-month benchmark bills due May 11, 2011, as well as $1 billion of six-month bills due Aug. 10, 2011.
Fannie Mae will sell the bills in a Dutch auction, in which successful bidders pay only the price of the lowest bid accepted rather than the actual price as the bidder would in a conventional multiple-price auction.
Fannie Mae shares have a 52-week range of $0.19-$1.36. The stock is currently trading above its 50-day and 200-day moving averages.
Shares of Fannie Mae plunged Friday after CNBC reported that the Obama Administration is looking to lower the role of government backed mortgages, which includes Fannie Mae, to below 50% of the market. When questioned about the CNBC report, Treasury spokesman Steven Adamske said that the administration is looking at how to transition from a government having too big a footprint in the market place to one that has the private sector playing the dominant role. It may be recalled that Fannie Mae was bailed out by the U.S. government at the height of the financial crisis back in 2008.
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