Credit fears remain clearly in investors’ view for the second straight week, and shares of dual mortgage finance giants Fannie Mae (FNM) and Freddie Mac (FRE) continue their pre-market freefall. Freddie Mac was at 5.55, down nearly 22 percent as of 9:57am; Fannie Mae was at $8.16, down 16.14 percent. It’s clear at this point that equity investors are beating each other up over concerns that the U.S. Treasury may step in and wipe out existing equity interests. Testimony later Tuesday morning from both Fed chief Ben Bernanke and Treasury secretary Henry Paulson in front of the Senate Banking Committee is shaping up to be key, as investors look for any inkling of details regarding the Treasury’s as-of-yet vague plan to prop up the ailing GSEs. Whitney strikes at Wachovia Rock-star equity analyst Meredith Whitney set her sights on Wachovia Corp. (WB) before market open Tuesday, as well, according to a report by Reuters. The core of her analysis is that banks still have mortgage-related assets booked too high, and that the market value must be marked down to calm the current crisis of investor confidence. She singled out Wachovia’s marks in particular as “too aggressive,” according to various published reports. The bank holds a substantial $170 billion residential mortgage portfolio; a whopping $121 billion of that total was in the form of option ARMs at the end of Q1. It said last week that it expects to report an after-tax loss of between $2.6 and $2.8 billion, or $1.23 to $1.33 per share, as it absorbs $4.2 billion to build its loan loss reserves. Shares in the North Carolina-based bank were at $7.99, down nearly 20 percent, in early trading on the New York Stock Exchange. But the market woes afflicting the GSEs and Wachovia were far from unique: in midmorning trading, the Dow Jones industrial average dropped 171.87, or 1.55 percent, to 10,883.32. Disclosure: The author was long FRE and held various put option contracts on WB when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.