Paulson said that in 2010 the GSEs will start reducing portfolios with 10% per year, and they will start paying back expenses of the bailout and restructuring.
http://en.wikipedia.org/wiki/Subprime_mortgage_crisis#Fannie_Mae_and_Freddie_Mac http://en.wikipedia.org/wiki/2008_GSE_support_plan
Some highlights "The senior preferred stock shall not be entitled to voting rights. In a conservatorship, voting rights of all stockholders are vested in the Conservator." "Make any payment to purchase or redeem its capital stock, or pay any dividends, including preferred dividends" "Warrants for the purchase of common stock of each GSE representing 79.9% of the common stock of each GSE on a fully-diluted basis at a nominal price"(according to the NYT nominal price means less than $1, I'm betting it might be $0.01) Also the LANGUAGE was really strong in terms of not being kind of shareholders, this will get the 'strong hands' that are currently long the stock(the 'true believers') have to face reality They will plunge(at least 50%), XLF will skyrocket IMO
No wonder the smart shorts usually close the positions on Friday. This is the type of tail risk you don't want to see for holding over the weekend.