Crocodilian

Secretary Paulson’s Endgame for Fannie and Freddie

"He purposely did not ask Congress for an explicit government guarantee of Fannie and Freddie debt and MBS because he did not want to lose the discipline of private sector credit evaluation."

Ummm. That's not such a convincing argument, given the feeble performance of "private sector credit evaluation".

How about this alternative explanation:
Making the guarantee explicit would have required the Government to put the guarantees on _its_ balance sheet.

As to your thesis on the GSE preferreds, we're now in the domain of "political investing", where the numbers and the business logic don't matter, and financial outcomes are decided politically.

The GSE Preferreds are thus like the old Tsarist bonds . . . you had to make a judgment about whether a Russian government would ever decide to pay them off. . . a lot of money can be made that way, but its political speculation, not investing.