Finance company's shares plunge on news that it has turned to Wall Street and may cut dividends as losses cut deep into capital.
Freddie Mac, a government-sponsored enterprise designed to help provide financing to the mortgage market, announced Tuesday that it is looking to raise cash itself after a larger-than-expected loss cut its capital close to the bone.
The news whacked the company's shares nearly 30 percent in midday trading.
Wall Street was spooked by Freddie's announcement that its capital surplus had fallen by $1.2 billion, to only $600 million above a mandatory target set under a consent decree with regulators.
Freddie also said it has hired Wall Street firms Goldman Sachs (Charts, Fortune 500) and Lehman Brothers (Charts, Fortune 500) to help it "consider very near term capital-raising alternatives."
The firm reported a net loss of $2 billion, or $3.29 a share, in the third quarter.
The firm also announced an $8.1 billion, or 25 percent drop, in the fair value of its assets - another way it measures its financial performance - and it said it had set aside $1.2 billion to cover credit losses.
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