Fannie & Freddie Back-Stopped!

No journal is talking about this but I think its quite likely dividend payments on the common will be either extinguished or reduced to symbolic level and they will likel y add some moral hazzard language in there to show the money wont go to shareholders till the treasury is paid. whether this will be enough to send these stocks down I'm not sure
 
I agree that if the common stock exists on Monday, then the dividend will be reduced to zero.

However my crystal ball says that a more likely scenario is that the common stock is cancelled altogether.

We'll find out the specifics in about 32 hours.


Quote from Daal:

No journal is talking about this but I think its quite likely dividend payments on the common will be either extinguished or reduced to symbolic level and they will likel y add some moral hazzard language in there to show the money wont go to shareholders till the treasury is paid. whether this will be enough to send these stocks down I'm not sure
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Quote from m22au:

http://online.wsj.com/article/SB122064650145404781.html?mod=hpp_us_whats_news

By DEBORAH SOLOMON and DAMIAN PALETTA
September 5, 2008 4:42 p.m.

WASHINGTON -- The Treasury Department is close to finalizing a plan to help shore up mortgage giants Fannie Mae and Freddie Mac, according to people familiar with the matter.

Precise details of Treasury's plan couldn't be learned. The plan is expected to involve a creative use of Treasury's new authority to make a capital injection into the beleaguered giants.

The plan includes changes to senior management at both companies, according to a person familiar with the plans.

An announcement could come as early as this weekend.



*****NEWSFLASH*****, this just in!

A well-informed source close to the talks said a management team with exceptional reputations at ru(i)nning trillion dollar budgets, will soon be available for 'helping out' in this important hour of need.

The team of Bush Cheney have indicated their willingness to accept and assume the management of both entities, (they get one apiece!). As an inducement, the Sec of the Treas, the Honorable Hank Paulson, has guaranteed them unlimited budgets and backstopping, and said, 'heck, they can lose all the hundreds of billions they wanna, and we'll just give 'em more, no problem'.

In addition, they have agreed to begin 'work' immediately, saying, 'it's not like we're too busy doin' much anyways'.

Mr. Bush was heard muttering something about going out and buying a spanking-new white hat for the ocassion, and already took his first official action as acting head of one of the organizations, by ordering the immediate creation of a banner, that says, 'Mission Accomplished', to be readied for their first press conference.

Mr. Cheney, in a rare show of bipartisanship, has invited the entire Democratic side of the Senate, and Supreme Court, on an extended 'down-home hunting trip'.
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Thanks for the information Osorico.

It's clear that Freddie already meets one of the criteria for index removal - a market cap well below $5 billion.

And on Monday FNM will with near certainty meet that criterion as well.

Quote from osorico:

The answer is no. The question is when...
http://www2.standardandpoors.com/spf/pdf/index/SP_500_Factsheet.pdf

Seems there is a scheduled quarterly rebalance happening September 19, 2008, based on "Index Alert Friday", September 12, 2008. Timing Coincidence??
http://www2.standardandpoors.com/portal/site/sp/en/us/page.article_fa/2,3,1,0,1204839197231.html
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Virginia Beach-based Gateway Financial Holdings (GBTS), has about 34% of its tangible capital tied up in Fannie and Freddie preferred shares, according to Caldwell. Just behind is Midwest Banc Holdings (MBHI), a suburban-Chicago bank with 32% of its capital tied up those shares.

http://money.cnn.com/2008/09/07/news/companies/fannie_freddie_aftershocks/index.htm

GBTS and MBHI might be stocks to watch on Monday.

http://finance.yahoo.com/q?s=GBTS,MBHI&d=s

FISI ... about 15%

http://biz.yahoo.com/ap/080827/financial_institutions_analyst_note.html?.v=1

Longer list of companies:

http://finance.yahoo.com/q?s=MBHI,GBTS,SOV,WABC,FISI,WL,FFKT,MTB,FTBK,,CATY,VLY,AF,WFSL,EWBC,CYN&d=s


Quote from m22au:

Information about banks holding the bag with FNM preferred and FRE preferred:

http://finance.yahoo.com/q?s=MTB,SOV,FTBK,MBHI,CATY,WABC,VLY,AF,WFSL,EWBC,CYN&d=s

It looks like MBHI may be the most exposed, with $67 million holding (source - Bloomberg) versus a $128 million market cap.

http://www.marketwatch.com/News/Story/Story.aspx?guid={A80BA738-16A4-4A2F-9287-AF3756D337FA}&siteid=yhoof2

http://www.bloomberg.com/apps/news?pid=20601087&sid=aM7PbcXSYeIU&refer=home
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Quote from Landis82:

According to the WSJ, the Treasury Department will announce this over the weekend.

Check out the AH on Fannie and Freddie.
Seems to be confirming the "rumor"/news.
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Anyone stay on this board long enough should know Landis82 works for governments.
 
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