by Calculated Risk on 9/05/2008 09:20:00 PM
Friday, September 05, 2008
Update2: WaPo says preferred protected: Fannie Mae, Freddie Mac to be Put Under Federal Control, Sources Say
Under the plan, the federal government would place the firms in a legal state known as conservatorship, the sources said. The value of the company's common stock would be diluted but not wiped out while the holdings of other securities, including company debt and preferred shares, would be protected by the government.That makes more sense than the NY Times article.
Update: Here is the NY Times story: U.S. Plans Takeover of Fannie and Freddie
Senior officials from the Bush administration and the Federal Reserve on Friday informed top executives of Fannie Mae and Freddie Mac, the mortgage-finance giants, that the government is preparing a plan to seize the two companies and place them in a conservatorship ...A little thread music:
Under a conservatorship, most if not all of the remaining value of the common and preferred shares of Fannie and Freddie would be worth little or nothing, and any losses on mortgages they own or guarantee could be paid by taxpayers.
The WSJ has update their story: U.S. Near Deal on Fannie, Freddie
The Treasury Department is putting the finishing touches to a plan designed to shore up Fannie Mae and Freddie Mac ... a move that would essentially result in a government takeover of the mortgage giants.This weekend will be interesting.
The plan is expected to involve putting the two companies into the conservatorship of their regulator, the Federal Housing Finance Agency ...
It is also expected to involve the government injecting capital into Fannie and Freddie. ... Daniel H. Mudd, chief executive of Fannie Mae, and Richard Syron, his counterpart at Freddie Mac, are expected to step down from their posts eventually.
Posted by Calculated Risk on 9/05/2008 09:20:00 PM