The fallout from the crisis at Fannie Mae and Freddie Mac spread across the financial system yesterday as JPMorgan Chase warned of a possible $600m loss from its holdings of preferred shares in the two mortgage financing groups. It said it would write down the value of its $1.2bn preferred shares in Fannie and Freddie by half.

Banks and insurers own most of the $36bn in preferred stock in Fannie and Freddie, and JPMorgan's announcement will raise pressure on other holders to make similar writedowns.