US looks at Fannie, Freddie contingency plans: WSJ

NEW YORK (Reuters) - The Bush administration has had discussions about contingency plans in the event that giant government-backed mortgage-lenders Fannie Mae (FNM.N) and Freddie Mac (FRE.N) falter, the Wall Street Journal reported on Wednesday.

Shares of the two companies have taken a beating recently on worries about whether they can withstand more losses and support housing as well as concerns that they might need to raise massive amounts of new capital.

The discussions have been going on for months as part of the Treasury Department's normal planning, but have become more serious of late, the Journal said, citing three people familiar with the matter.

According to the paper, the government doesn't expect Fannie and Freddie to fail and no bailout is imminent.

Still, the Journal said Treasury officials are looking at what to do if the two companies can't raise more money and keep operating.

Freddie Mac shares slid 23.8 percent, or $3.20, to $10.26 on Wednesday, after briefly breaking into single-digit territory, while Fannie Mae shares fell 13.11 percent, or $2.31, to $15.31, both on the New York Stock Exchange.

Representatives of Fannie and Freddie were not immediately available to comment.

(Reporting by Michael Erman, editing by Richard Chang)