Why did Fannie Mae and Freddie Mac Stock plummet after they were rescued by the Gov’t? What Government/Fed move or what event for that matter could have raised the stock prices of these two GSEs?
Uh, because the govt said that the stock was essentially worthless because they created a more senior class of security that makes the equity worthless. Let’s see. If the Fed/Treasury had wanted to bail out the equity holders they could have: a) Given the GSE’s lots of money b) Made an offer for all the equity at $27/share c) Purchased all outstanding GSE debt and replaced it with Treasuries and a whole bunch of other stupid things. The equity is a RESIDUAL interest. There ain’t no RESIDUAL left.
The equity holders are left with a story that they “took one for the greater good” and not much else. Any thoughts on how this would have played out if this was NOT an election year?
common is last man on the totem pole. preferred banked, tax payers raped. welcome to the street, dog!