UPDATE: Fannie & Freddie Fall into Federal Control

Posted by on September 7th, 2008 at 08:12pm

wrote an interesting post today on
Here’s a quick excerpt
Updates regarding Fannie Mae & Freddie Mac (as promised)…

U.S. government will be investing up to $100 billion in each company to keep them solvent. Under the plan, the government will make periodic injections by buying either convertible preferred shares or warrants in both companies “as needed.”

Power of stockholders will be suspended until government control ends.

Auditors investigating the books of both Fannie and Freddie have found several accounting irregularities. Additionally, both firms’ capital base has been found to be much smaller than expected.

According to estimates by Ladenburg Thalmann & Co., Fannie and Freddie hold approximately $1.5 trillion in direct debt, guarantees that could be as large as $5 trillion and possible off-balance sheet obligations of up to $3 trillion.

The ultimate cost to U.S. taxpayers is infinite at this point.

Fannie Mae’s CEO Daniel Mudd and Freddie Mac’s CEO Richard Syron will both be replaced. Herb Allison, former vice […]

Read the rest of this great post here

Under Uncategorized