Early Briefing: Fannie and Freddie Continue Their Fall
*Shares of Fannie Mae and Freddie Mac continued to plummet Thursday as investors and federal officials contemplated the possibility that the giants of the mortgage business could require a federal bailout.
On Capitol Hill, the Treasury secretary offered reassurance that they are still on firm footing, and the Senate moved on approved a housing relief bill that would give a regulator more power over them. On the campaign trail, the presumptive Republican presidential nominee vowed to do whatever is necessary to keep the companies functioning. In the financial world, some people had concluded that a painfully expensive rescue was probableinevitable, while others said it was unlikely. The speculation was taking on a life of its own, feeding a downward spiral.
On one point there seemed to be general consensus: The failure of Fannie Mae or Freddie Mac could be devastating, making it harder for people to buy and sell homes and sending ripple effects through the broader economy.
*We wrote yesterday that Marriott's profit fell 24 percent in the second quarter. That news was unsettling for the industry. Let there be no mistaking it now: The hotel boom is kaput.
"There's no doubt we are in a very turbulent period," said Thomas Baltimore, the president of Bethesda's RLJ Development, one of the largest owners of Marriott hotels. "Clearly we are seeing softening demand -- there's no doubt about that."
With oil prices soaring, getting from point A to point B has become -- either by car or airplane -- more expensive for leisure and business travelers, who are now looking to cut back on trips. Throw in weaker corporate results, which causes companies to further tighten their belts, and airlines cutting flights and capacity, which makes it more difficult and expensive to travel, and Marriott executives are faced with an unappealing environment.
*More than midway through the baseball season, the Washington Nationals' owners have failed to pay $3.5 million in rent for the District's new ballpark, contending that the state-of-the-art stadium is still incomplete.
Besides withholding rent, the team is demanding damages of $100,000 a day, dating from March 1. The team and the city are also at odds over the timing of sales tax payments on tickets, with the Nationals paying game-by-game and the city wanting tax revenue from pre-sold ticket packages upfront.
D.C. officials said they plan to hire a special lawyer to handle what they expect to be prolonged arbitration over the ballpark, which was built with tax dollars.
*The city has picked a developer for a site that includes the Janney Elementary School and the former Tenley-Friendship Library, Mayor Adrian M. Fenty (D) announced yesterday. Although precise plans are not set, the LCOR development firm plans to build about 130 housing units over a new library at the Tenleytown site. Parking for the library, school and residences would be underground.
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