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The Treasury's move to help itself to all of the profits of Fannie Mae and Freddie Mac has...

The Treasury's move to help itself to all of the profits of Fannie Mae and Freddie Mac has indeed blown up a popular trade - that of buying up the preferreds in the hope the companies would one day earn enough to again make payments on them. One issue, the Fannie 8.25s, is off 59%.
Comments (6)
  • I wondering how the government expects the two largest mortgage buyers to operate as key players in the capital markets when they are both shielded from losses and denied any gains? The continuing saga of government intervention into these markets, going back to Congressional quotas for sub-prime, reads like a comedy of errors. Originally setup as part of the new deal, these GSEs were intended to provide liquidity for the housing market, which ultimately, they did all too well, and created the housing bubble in the mid-2000s. Why do we even need these entities anymore?
    17 Aug 2012, 01:37 PM Reply Like
  • good point
    17 Aug 2012, 02:11 PM Reply Like
  • The comedy of errors is more like a grand tragedy of hubris.
    17 Aug 2012, 02:31 PM Reply Like
  • Where else could all the political cronies go to work.
    17 Aug 2012, 03:04 PM Reply Like
  • I am not sure I understand what the government is doing. they are taking the profits as a dividend without regard to their capital infusion or will it end when they get the money back?
    17 Aug 2012, 09:35 PM Reply Like
  • It will end when the government finally forgives the debt. But let us not forgot that money is not theirs to forgive. Its our money. What they are accomplishing now is an accounting trick that if any business used people would go to jail.
    17 Aug 2012, 11:28 PM Reply Like
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