Fannie & Freddie Back-Stopped!

Discussion in 'Wall St. News' started by Landis82, Sep 5, 2008.

  1. 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.
  2. m22au


    I'm amazed that the stocks went up 10% plus as an initial reaction
  3. m22au


    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.

    On Friday, a series of high-level meetings were planned between Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson, the chief executives of Fannie Mae and Freddie Mac and the companies' new regulator, the Federal Housing Finance Agency.

    Treasury has been working with bankers at Morgan Stanley to use its newfound authority, granted by Congress in July, to devise a way to prop up the mortgage giants, which have been pummeled by investors in recent weeks.

    The two giants are vital cogs in the U.S. housing market and their financial woes have threatened to worsen the bursting of the housing bubble.

    "We are making progress on our work," said Treasury spokeswoman Jennifer Zuccarelli. She declined to comment further on Treasury's plans.
  4. I love how they wait till after the market closes to give us the news. Like this morning when the market did a swan dive would have been nice. Scumbags!!:eek:
  5. m22au


    if the bailout goes ahead, then I'm thinking that there will be some upside for equities (except FRE and FNM) on Monday
  6. dow 36,000 by monday!:p anyway scalping is fun!!
  7. Last week, Treasury Secretary Henry Paulson promised that terms and conditions of the package would "protect the taxpayer," without elaborating.

    But the new credit line to be extended to Freddie and Fannie under the package has no dollar limits at all. The proposal also permits the government to purchase equity of Fannie and Freddie. But a provision to insure that the government (read, the taxpayer) would receive preferred stock - that is, payment prior the claims of Freddie and Fannie's shareholders - if Treasury seeks give Freddie and Fannie a cash infusion through an equity purchase, was dropped.

    Some in Congress claimed that taxpayer liability was effectively constrained by the statutory debt limit, currently $9.8 trillion. But the rescue package was actually amended to provide for an $800 billion increase in the debt limit, to $10.6 trillion. At least this $800 billion would cover the worst case of a total default of Freddie and Fannie's subprime portfolio

  8. You mean you didn't get the memo?
  9. S2007S


    More bailouts...

    Another joke.

    More ARMS resetting everyday, foreclosures still have yet to peak, tax payers money is going to be used for a hell of lot more bailouts over the next 2-3 years.
    #10     Sep 5, 2008