ajtj99's Market Pulse

[jdaasoc]

Iran and Iraq not adminisitrations primary focus IMO.
After 5 years of war mongering and associated war profiteering, the administrations desire on middle east war is slowing ebbing.

In its place IMO, we are getting the starting the picking of the carcass of GSEs, FNM & FRE, by the brokerages firms that gave us CDO and SIVs.

Reading from this AP newsclip it looking like FNM preferred stock is not convertible into common and buyers of it are just looking for the yield and and whatever assets that back the bonds if they have to seek some sort of government supported bailout or receivership that Englands's Northern Rock may be entering into.

http://biz.yahoo.com/ap/071205/fannie_mae_capital.html?.v=5


The special stock sale "will provide the company with additional capital to conservatively manage increased risk in the housing and credit markets, help meet its mission of providing affordability, liquidity and stability, and free up capital to pursue emerging growth opportunities," Fannie Mae said in a statement.

The company said it expects the continuing turmoil in the housing and credit markets and anticipated further declines in home prices to "negatively affect" its financial condition and results next year.

Fannie Mae shares, already down $1.07 or nearly 3 percent to close at $35.18 Tuesday, fell another 81 cents to $34.37 in extended trading after the company's announcement.

"Fannie Mae has a responsibility to serve the mortgage market in good times and in times like these," the company's president and CEO, Daniel Mudd, said in a statement. "The steps ... are designed to enable us to meet that responsibility with a comprehensive, conservative plan to serve the market and manage our capital. The market needs us to be there -- and we believe this plan will help us do that."

The entire $7 billion in preferred stock to be sold will not be convertible into common stock, Fannie Mae said. Converting stock into common stock dilutes the value of outstanding shares and could further depress stock prices.

Typically, preferred stock pays a higher dividend than common stock and carries a stronger claim on the assets of a company if it goes into bankruptcy.