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Frannie wind-down could spare preferreds; faces hurdles in any case

  • “It’s hard to find any reasonable outcome that’s really terrible for the preferreds, given what I perceive to be the value of the business that’s already there," says portfolio manager Jeffrey Lewis, an owner of the shares. Investors in the common stock, however, are making a bet Fannie Mae (FNMA +12.4%) and Freddie Mac (FMCC +13.4%) will be allowed to become dominating private companies again and keep their profits.
  • It's up to the courts to decide how investors will be treated, says Sen. Mike Crapo, who co-wrote the bill to wind the GSEs down. "We are not necessarily going to dictate the outcome."
  • As for whether a bill actually becomes law anytime soon, former Senate banking panel aide Mark Calabria gives it maybe a 10% chance of getting to the president's desk this year. The dim prospects look to be giving a boost to the common shares today.
Comments (11)
  • s404n1tn0cc
    , contributor
    Comments (84) | Send Message
    Who's writing this??? Equity is equity. beside letting them trade is the best solution to Capitol markets. or better yet the words "reinstated" come to mind.
    13 Mar, 11:32 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (8335) | Send Message
    The Cleveland Browns will have their second Super Bowl victory before F&F are wound down.


    That is how long it will take.


    Don't worry about congress agreeing to anything.
    13 Mar, 11:39 AM Reply Like
  • jeepman58
    , contributor
    Comments (182) | Send Message
    I wouldn't put money on the Browns winning the Super Bowl in the next few years. I think you're right about Congress - some Senators are showboating that they can reach across the aisle and make things happen and F&F is easier than dealing with Obamacare. Considering how well the government has handled Obamacare, it might be a disaster for them to try and take on serious reform of F&F. Can't enroll, can't get a mortgage processed, computer bugs and malfunctions...leave F&F and just adjust the regulations for lending standards and oversight. Congress loves to hold hearings. But don't try to reform the system - it will get it all mucked up.
    13 Mar, 06:04 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8335) | Send Message
    Regarding the Browns...that was the point.


    Congress showed the world how poorly they dealt with healthcare and budget cuts.


    Fannie and Freddie are the big leagues when it comes to compromise and Congress is still stuck in little league.
    13 Mar, 09:43 PM Reply Like
  • David Sims
    , contributor
    Comments (308) | Send Message
    Now you tell me... After I sold all my preferred and bought common!
    13 Mar, 11:59 AM Reply Like
  • Caludio
    , contributor
    Comments (163) | Send Message
    Dont worry. You will do better with the commons. What happen here is not that the commons fall, instead is that the commons had accelerated last month way too much. Nothing has changed. Just a couple of Senators showing off for "the picture" in the papers.
    13 Mar, 04:12 PM Reply Like
    , contributor
    Comment (1) | Send Message
    Market overreaction about the bill a couple of days ago. If you owned FNMA, you should have known this bill was coming months ago.
    13 Mar, 12:00 PM Reply Like
  • philipmax
    , contributor
    Comments (251) | Send Message
    The whole issue boils down to property rights under the Constitution.


    Regardless of what Treasury did in 2008, the question is, can the government confiscate private property without just compensation?


    Since these companies were never legally declared insolvent, there is no mechanism for any entity, private or public,to take it away from its owners.. unless, by theft.
    13 Mar, 02:06 PM Reply Like
  • Caludio
    , contributor
    Comments (163) | Send Message
    Instead of running away backward a few senators are checking forward. They think a good attack is the best defense. But this is not a chess game. The entire housing market will collapse. This will be so bad that never will happen. These guys are playing super heroes (Corker Warner Crapo etc) but they may lose their seats soon. What they are trying to do will hurt the people and is not what people wants
    13 Mar, 03:03 PM Reply Like
  • jeepman58
    , contributor
    Comments (182) | Send Message
    Most people don't know that 50% of mortgages exist because of F&F. The 30 year fixed mortgage is due to F&F backing. When the market ran free via the investment banks in the early 2000's we were all sold a bill of goods with cheap 5 year ARMs - and that lead to the market crash. And the cost of mortgages (like Obamacare insurance) will go up if F&F are shuttered. And no matter what, under today's system or the proposed plan by Crapo, the government will remain support of last resort.


    How many times has the USG had to bailout Fannie in 76 years, and Freddie in 44 years? This was a unique period in the last 90 years of American history.


    Good article here:
    13 Mar, 06:17 PM Reply Like
  • dgfurr
    , contributor
    Comments (64) | Send Message
    Want to buy a cheap house in a popular area. You will be able to soon. Property values plummet without buyers. Hide and watch as our goverment performs another fustercluck. Only this time it will be much worse than the F-35 Fighter that doesn't work and they can't kill. This time it will make everyone's property illiquid and speculative.
    14 Mar, 06:46 AM Reply Like
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