Opening View: Could Washington Take Control of Fannie Mae and Freddie Mac?

The not-so-dynamic duo of Freddie Mac (FRE: sentiment, chart, options) and Fannie Mae (FNM: sentiment, chart, options) are dominating sentiment in the financial sector this morning, after The New York Times reported that the U.S. government is weighing a plan to take control the ailing lenders. The plan being floated is designed to place FRE and FNM in a conservatorship if problems worsen. Such a move would mean that the shares of Fannie and Freddie would be worth little or nothing, the report said. In electronic trading, shares of FRE and FNM have plunged, dropping about 27% and 23%, respectively.

In other financial news, Citigroup (C: sentiment, chart, options) announced that it has agreed to sell its German retail banking operations to France's Credit Mutuel for 4.9 billion euros ($7.7 billion) in cash plus earnings accrued in 2008 through the closing of the deal. The sale is expected to close in the fourth quarter, pending regulatory approval. Citigroup expects the deal to result in an after-tax gain of around $4 billion. The company reportedly decided to sell the unit following a global strategic review by CEO Vikram Pandit.

In earnings news, General Electric (GE: sentiment, chart, options) reported a second-quarter net profit of $5.07 billion, or 51 cents per share. Earnings from continuing operations were $5.39 billion, down from $5.61 billion, but came in flat at 54 cents per share. Quarterly revenue rose 11%, reaching $46.89 billion from the prior year's $42.38 billion. Analysts were looking for a profit of 54 cents per share.

Looking forward, GE was a bit cautious, placing third-quarter earnings from continuing operations at 50 cents to 54 cents per share, a growth rate flat to 8% higher than last year. The company also reiterated its full-year profit target of $2.20 to $2.30 per share. Analysts are expecting a third-quarter profit of 55 cents per share and full-year earnings of $2.22 per share.

Finally, Wynn Resorts (WYNN: sentiment, chart, options) said it sees second-quarter operating income in Macau doubling and Las Vegas operating income dropping by more than 50%. The company also announced an increase to its share buyback program. Specifically, operating income for Las Vegas will be in the $18 million to $22 million range, compared with $63.4 million last year. In Macau, operating income is expected to be in the range of $100 million to $106 million, compared with $53.2 million in the year-ago period.

Opening View: Could Washington Take Control of Fannie Mae and Freddie Mac?