Fannie and Freddie to pay out all profits

Source: Financial Times

Fannie Mae and Freddie Mac will pay all of their earnings to the taxpayer as part of a package of measures to wind down the troubled mortgage finance agencies more rapidly.

The US Treasury said that it was changing its deal with the agencies so they would transfer their full profits –whatever they might be –rather than paying a fixed 10 per cent dividend on government-owned preference shares.

The changes will prevent Fannie and Freddie from rebuilding their capital base and hence taking a larger role in the mortgage market. They also eliminate a perverse situation whereby the two agencies sometimes had to borrow more money from the Treasury to pay the preference dividend back to it.

Read more: http://liveweb.archive.org/http://www.ft.com/cms/s/0/a9f295ce-e883-11e1-8397-00144feab49a.html

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3 replies	Author	Time	Post
Fannie and Freddie to pay out all profits (Original post)	alp227	Aug 2012	OP
I wonder if they'll pay back my husband's retirement savings	LiberalEsto	Aug 2012	#1
Did anyone get a "malicious site" message from their virus blocker?	Hestia	Aug 2012	#2
This is the Most Important Part of That News IMO	On the Road	Aug 2012	#3

Response to alp227 (Original post)

Fri Aug 17, 2012, 06:26 PM

LiberalEsto (16,926 posts)

1. I wonder if they'll pay back my husband's retirement savings

but I very much doubt it.

He worked for Fannie for nearly 18 years and took a buyout.
Before he left, when they knew the stock was about to tank, the executives sent out a notice ordering company workers NOT to sell their stock.
Meanwhile, the execs dumped theirs, the stock tanked, and the workers at Fannie lost huge amounts of money on their own stock. One guy my husband worked with lost $2 million in stock, which was all his retirement savings. Fannie used to give people shares as bonuses, etc. My husband was luckier by comparison - he "only" lost $45,000 in retirement money. But that's still a LOT of money to us. I hope those Fannie officials fry in hell.

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Response to alp227 (Original post)

Sat Aug 18, 2012, 01:58 AM

Hestia (1,723 posts)

2. Did anyone get a "malicious site" message from their virus blocker?

Norton wouldn't let me on the site, which is known as having a virus. Heads up.

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Response to alp227 (Original post)

Sat Aug 18, 2012, 11:15 AM

On the Road (20,361 posts)

3. This is the Most Important Part of That News IMO

The changes will prevent Fannie and Freddie from rebuilding their capital base and hence taking a larger role in the mortgage market.

Now, there were certainly problems with how the secondary market functioned over the last decade. But this would seem to pull out the rug out from any recovery in home ownership and housing prices.

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