Skip to main content

Newsroom

April 12, 2013

Speculators aim to milk Fannie and Freddie

That mooing sound you hear in the distance is a cash cow. There has been quite the transformation in the market’s perception of the US mortgage finance groups Fannie Mae and Freddie Mac, which were taken over by the federal government at the height of the financial crisis in 2008.

From being a money sink, draining the US Treasury to the tune of $187.4bn so far, the pair suddenly look like they will make money for the taxpayer. Investors have piled in to the groups’ defunct preferred shares and common equity, taking a (very) long-shot punt that they might somehow get to milk the cow, too.

Small community banks are weighing in to demand a reversal of the 2008 wipeout of preferred shareholders, adding a further element of uncertainty to the task of reforming the US mortgage market.

For mortgage investors, resolving the future of Fannie and Freddie is vital to settling the US government’s role in the housing market, itself a prerequisite for the re-emergence of a private mortgage-backed securities market.”

***

Read full Financial Times article here

 
 
In the News
Share

MEDIA REQUESTS

For media inquiries, please contact us at
press@bettermarkets.org or 202-618-6433.

Contact Us

For media inquiries, please contact press@bettermarkets.org or 202-618-6433.

To sign up for our email newsletter, please visit this page.

Name(Required)
This field is for validation purposes and should be left unchanged.

Sign Up — Stay Informed With Our Monthly Newsletter

This field is for validation purposes and should be left unchanged.

For media inquiries,

please contact press@bettermarkets.org or 202-618-6433.

Donate

Help us fight for the public interest in our financial markets, protecting Main Street from Wall Street and avoiding another costly financial collapse and economic crisis, by making a donation today.

Donate Today