pelican

Forget the Moral Outrage: Just Restore the Mortgage Markets

"For those who think that the common equity holders should be "wiped out", I question that sentiment."

Its just my opinion but I don't think - and never did - it was a question of "should" or not. I always looked at it as a consequence of what needs to be done. Like a lion hunting its prey; there is no malice involved or moral judgement, the lion does what it needs to survive. As you wrote, "We need to get them capital in the least costly and quickest fashion that we can, reestablish a normal mortgage market and then deal with a longer-term vision." If they can do that w/o wiping out current shareholder, they will. If they can't....

I can see a scenario, for example, where a reverse split is done (1:20) and then the government kicks in $5 billion and raises another $5 billion with the issuance of new shares at $10/share (an arbitrary figure but based on the number of shares outstanding, the new capital structure, etc.). Current shareholders would lose a lot - though not everything - but FNM and FRE would be in better shape and I think confidence would improve.

I agree that shareholders are not to blame for this mess. I didn't blame them for Enron or Worldcom either. But they are suffering like any investor would when the company invested in turns out to be a disaster. Of course, until we know the details of the plan, its just speculation how current shareholders will fare. Still, I'm betting not very well based on statements Paulson as made in the past, what media sources have been reporting, as well as some legislators. In other words, in spite of the lack of details, multiple sources are saying it doesn't look good for current shareholders and so that's what I believe at this moment.

Bill Gross: Politicking for His Own Bailout

Thanks for the article. I lost some respect for Gross this year as he continued to make self-serving comments. Its so transparent that he sounds almost desperate.

Revised Upside Targets for Fannie and Lehman

If SA screens and edits articles in advance, shouldn't they screen for product pushers as well?

Mother of All Short Squeezes?

Great article, Matt. Lots of interesting responses from people too.

10 Top Dividend Stocks of the S&P 500

Are those dividends safe?