Filed under: Federal Natl Mtge (FNM)

Three weeks after Barron’s reported that a senior administration official — my guess is it was Hank Paulson — leaked details of a “rescue” plan for Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) — Bloomberg News reports that its implementation could be imminent. And in after-hours, shares of both companies are down 20%. If what Barron’s reported — wiping out common shareholders and slashing preferred dividends — proves prescient, both stocks have further to tumble — as in all the way to 0.

Bloomberg reports that Paulson met with Ben Bernanke and the CEOs of Fannie and Freddie and the head of the Federal Housing Finance Agency which oversees the two. And they have catering set for the entire weekend. I wonder what they are serving? I think PIMCO bond guru Bill Gross knows. He said, “There’s probably a 95 percent chance that the moment that something will happen is Sunday or Saturday,” according to Bloomberg.

Yesterday Gross called for the government to use $500 billion to bail out the real estate market. As I posted yesterday, this bailout is for the benefit of people like Gross and China’s central bank which owns $340 billion worth of Fannie and Freddie mortgage-backed securities. If you happen to be among the holders of their common or preferred stock — you are going to lose it all. As I suggested this morning, after the market lost 345 points yesterday, the government needed to announce another rescue plan by Sunday night.

Continue reading Will Fannie and Freddie shareholders be wiped out this weekend?

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This entry was posted on Sunday, September 7th, 2008 at 10:13 am and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.