Fannie Mae PRD PERP/CALL Ser DIV 8.25% (FNMAT)

[dpsimswm]

Heavy criticism for GSE recap proposal

"In the long history of bailout deals, no heist of the U.S. taxpayer would approach this one in cynicism and chutzpah," writes Jonathan Laing of Bruce Berkowitz's buyout plan for Fannie (FNMA +5.7%) and Freddie (FMCC +5%). One analyst calls it a "three-card monte" scheme in which the preferred holders want taxpayers to pay them off at par, or turn over the keys to the companies wildly valuable operations for little more than a $17B rights offering.
Yes, Treasury will have realized $187B in dividends from the GSEs by year end - equal to the amount of the bailout - but that's "merely fair recompense for the enormous risks taxpayers took." Also, more than $80B of the $187B is the write-up of deferred tax assets - it will only be realized if the companies operate profitably for many years, says Laing.



http://seekingalpha.com/currents/post/1440261?source=email_rt_mc_readmore