Freddie Mac-No Politics (FMCC)

[prokopton]

DD for FMCC newbies

Reminders on what common shareholders have going for them. Big Money is all over this one. If AAMRQ's market cap. is $2 billion, using he similar financial metrics, FMCC's market cap. should easily be $30+ billion.

--In 2.5 months (March 12 - May 28): Over $2.7 billion have been poured into FMCC common shares alone. A similar amount have been poured into FMCC's junior preferred shares by hedge funds.

--the precise 79.9% (the 80% threshold would have made FMCC a federal government owned business and not a GSE) was designed on purpose that left the door open to possible future privatization.

--politicians will decide the fate of FMCC. Two things we know about politicians: 1) They appease those who contribute to their campaign funds, 2) They badly want to get re-elected.

John Paulson (net worth $11.2 billion) and hedge funds lobbying for privatization

"Hedge funds including John Paulson’s Paulson & Co. are lobbying for a privatization of Fannie Mae and Freddie Mac that could benefit preferred shares they’ve bought."

http://www.bloomberg.com/news/2013-05-24/fannie-mae-winning-at-the-alamo-prompts-lender-angst.html

Ralph Nader advocating privatization

"Famous consumer advocate and former presidential candidate Ralph Nader has renewed his efforts on behalf of common shareholders of bailed out mortgage giants Fannie Mae and Freddie Mac."

http://www.cnbc.com/id/100765505

Taxpayers will benefit more if FMCC privatized: former treasury official

"Hedge fund lobbyists are arriving at Capitol Hill meetings with detailed financial analyses contending that selling off the government’s shares and recapitalizing the companies could make taxpayers an even larger profit, the people said. That also would boost chances that investors in preferred shares would benefit. The funds are making it clear they would be interested in buying the shares now held by Treasury, the people said.
Millstein Plan

The funds’ proposal is similar to one being circulated by James Millstein, the former Treasury official who oversaw the restructuring of bailed-out insurer American International Group (AIG). Millstein’s multiple-step blueprint calls for recapitalizing the two mortgage companies, eliminating their implicit government backing and selling off the Treasury stake. He would also create a new U.S. agency to reinsure loans. Millstein said his plan could leave taxpayers with $100 billion to $190 billion in profit.

Millstein, now chief executive officer of his own turnaround advisory firm, Millstein & Co., said that would be better than liquidating Fannie Mae and Freddie Mac.

“If policy makers get the size or pace of a forced wind- down wrong, we will suffer a credit contraction, house prices will fall and the U.S. economy will once again be at risk for a recession,” he told the House Financial Services Committee April 24.

Millstein said he holds some of Fannie Mae’s preferred shares himself.

Paulson Leads Hedge-Fund Lobby Push to Privatize Fannie

"Hedge funds including Paulson & Co. Inc. are pushing Congress to abandon plans to liquidate Fannie Mae (FNMA) and Freddie Mac (FMCC) as investors buy up preferred stock that has long been considered worthless, according to people with knowledge of the discussions."

http://www.bloomberg.com/news/2013-04-30/paulson-leads-hedge-fund-lobby-push-to-privatize-fannie.html

U.S. Government faces civil lawsuits if it seizes FMCC

"Under our constitution, the government cannot seize personal property without just compensation. If the government exercizes the warrant fot 80-% of the common, they are in fact saying that they want to control the gse's. Why would they do that if there was no value. On the preferred side, the original preferreds are senior to the proposed government common stake, and will have to be eventually redeemed from the individuals that own the securities at par plus unpaid divs." --DGFURR

Grass roots movement to privatize FNMA and FMCC

Privatize Fannie Mae (Freddie Mac in the same situation)

http://www.ipetitions.com/petition/freedom-for-fannie/

AIG, C, BAC, MS, GS were all privatized, why not FMCC?

Because it makes too much money for the U.S government? More reason the billionaires and hedge funds want to be compensated for their loss.

Is FMCC a buy?

Do your own DD and make up your own mind