U.S. likely to recapitalize Fannie, Freddie (on taxpayers' dime): report

[UpInArms]

Source: Reuters

NEW YORK (Reuters) - The U.S. Treasury is growing increasingly likely to recapitalize Fannie Mae and Freddie Mac in the months ahead on the taxpayer's dime, Barron's reported in its August 18 edition.

The weekly financial newspaper said that such a move could wipe out existing holders of the agencies' common stock, with preferred shareholders and even holders of the two entities' $19 billion of subordinated debt also suffering losses.

An insider in the Bush administration told Barron's that Fannie and Freddie "are being jawboned" by the Treasury Department and their new regulator, the Federal Housing Finance Agency (FHFA), to raise more equity.

But government officials don't expect the agencies to succeed, Barron's reported.

<snip>

After accounting for deferred tax assets and generous asset marks, Fannie and Freddie each may have a negative $50 billion in asset value, and little prospect of digging themselves out of the hole, Barron's reported.

Read more: http://www.reuters.com/article/bondsNews/idUSN1747783620080817

[BlooInBloo]

1. Naturally. The responsible always have to pay for the irresponsible.

[jtrockville]

2. Do we all get shares of Freddie/Fannie in exchange for our largess?

[tbyg52]

8. Damn good question! nt

[dysfunctional press]

11. only if we remember to bring the guillotine.

those things can work wonders.

[geckosfeet]

3. So. These companies will fail, but taxpayers need to foot the bill for CEO bonuses

before they close the doors? Or do they just get a continuous stream of taxpayer dollars until, well, until someone yells STOP - WE HAVE TOO MUCH MONEY - WE DON'T KNOW WHAT TO DO WITH IT!

[UpInArms]

4. Fannie Mae CEO's pay rose in '07 as losses mounted

http://www.reuters.com/article/bankingFinancial/idUSN0434145720080407

NEW YORK (Reuters) - The head of Fannie Mae, a company chartered by Congress to help more Americans own homes, reaped a 7 percent rise in pay last year, to $13.4 million, while the company lost money and the country suffered its worst housing crisis in decades.

Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) posted a $2.1 billion loss in 2007 and its shares fell 33 percent as the subprime mortgage crisis bled into all parts of the mortgage market while home prices fell nearly 9 percent.

Fannie Mae Chief Executive Daniel Mudd also received $5.4 million from stock awards that vested in 2007, according to a Securities and Exchange Commission filing by the company.

Mudd's compensation included just under $1 million in salary, $2.2 million in incentive payments, about $10 million from stock and option grants, and $153,531 in other compensation, according to the filing.

...more...

[geckosfeet]

7. When we bail these bastards out we should demand that not one penny goes

to CEO salaries, bonuses or compensations of any sort.

I am angry enough that we are spotting the homeowners some cash.

You know, at least when we have government administered assistance programs, we know where the $$$'s are going. The republicons use our tax money to bail out corporations who have run themselves into the ground. This is nothing but a transfer of wealth from the poor to the rich. It is madness.

[Doctor_J]

5. Every time a Bush moves into the white house, expect the taxpayers

to be slaughtered. And once again, just like last time, Neil "Fredo" Bush will make out like a bandit. When is this crime family going to be brought to justice.

[NeoConsSuck]

6. It's the capitalist credo:

privatize the profits, socialize the risks.

[Drum]

9. No kidding...

Is there any sort of accountability or consequences for the "financial" industry in this country?? Friends of friends, all getting rich, and the American Taxpayer has been these fuckers' version of the FDIC.

Sickening! :mad:

[angryfirelord]

10. Re:

It is not the taxpayer's duty to be footing the bill for a failing business and any fiscal conservative should recognize that. I hope Obama doesn't have any plans on following Bush's bailouts of corporations.

[AlphaCentauri]

12. When is that the middle class and the poor will be recapitalize?

[amandabeech]

13. Earlier today, Bob Pisani of CNBC reported that a spokesperson

from Treasury had said that Fannie and Freddie would not be bailed out. That's why the market went down 160. Pisani, joined by Jim Cramer, also said that they expected that Treasury would change its mind later, when things get even worse.

Make of it what you will.