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.
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
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
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.
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