mwphnh

Beware of Sending Fannie and Freddie Stock to Zero

You are 100% correct. The govt doesn't have to buy anything; just say we will not make them raise any common here...that we will let them sell preferred only for the next year or two with the promise to do common when the smoke clears. This is all about confidence as the situation; whatever it is; did not deteriorate that dramatically in the last 40 days. In the very 1980's the govt gave loan guarantees in exchange for warrants to Chrysler. The govt made a ton of money and saved the company. FRE/FNM are 100 times as important as Chrysler so I see trhe saME RULES APPLYING HERE. Placing the GSE's into conservatorship would be an unmitigated disaster and paulson - and i am saying this as a former GS employee - cannot be that stupid.