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Public companies socialize their profits through tax, legal, labor and regulatory compliance. According to the article, Fannie and Freddie are being hit above

by jhulla 10y ago

Public companies socialize their profits through tax, legal, labor and regulatory compliance. According to the article, Fannie and Freddie are being hit above and beyond those. This is quite unfair to the public shareholders. If Congress wants the public benefit, then Congress and the White House should have wiped out the public shareholders in 2008 and taken over the companies.

tosseraccount 10y ago
Share holders essentially were wiped out and the government did take over Fannie and Freddie. The remnant equities have very little value. Only people interested in the last 8 years are lawyers hoping to get paid off. What they should do is auction off the assets, pay off their creditors and let the banks, credit unions and other organizations manage the risk. There's plenty of competition in the lending business.
- pcarolan 10y ago
  Why? We got into this mess because the banks couldn't manage the risk and we had to bail them out.
  - tosseraccount 10y ago
    Banks got into it because the government was guaranteeing it. Make a loan, collect the fee, dump the junk on the tax payer. Government enabled and subsidized this. And still does. Home loan deductions, anybody? We didn't have to "bail them out". We should have let them go chapter 11. Plenty of folks with responsible finances could have bought up the assets.
    - collyw 10y ago
      It happened to banks outside the US, where they weren't guaranteed (but did get bailed out).
ddeck 10y ago
>This is quite unfair to the public shareholders. Admittedly they may not be the same shareholders, but let's not forget that Fannie/Freddie shareholders have benefited untold billions pre-crisis by being able to fund for years with an implicit government guarantee that was never paid for. http://www.federalreserve.gov/pubs/feds/2005/200505/200505pap.pdf http://www.federalreserve.gov/pubs/feds/2005/200505/200505pa...
pcarolan 10y ago
It wasn't news to any public investors that Fannie/Freddie is a quasi-governmental organization. Investors angered that they can't reap the rewards without paying for past/present/future risk and bad debt are also asking for more than they deserve. They were betting that they could spin off the government's stake after the government did their dirty work for them. The stock price should have been their signal that the government was wiping out that hope.

by jhulla 10y ago

tosseraccount 10y ago

Share holders essentially were wiped out and the government did take over Fannie and Freddie. The remnant equities have very little value. Only people interested in the last 8 years are lawyers hoping to get paid off. What they should do is auction off the assets, pay off their creditors and let the banks, credit unions and other organizations manage the risk. There's plenty of competition in the lending business.

pcarolan 10y ago
Why? We got into this mess because the banks couldn't manage the risk and we had to bail them out.
- tosseraccount 10y ago
  Banks got into it because the government was guaranteeing it. Make a loan, collect the fee, dump the junk on the tax payer. Government enabled and subsidized this. And still does. Home loan deductions, anybody? We didn't have to "bail them out". We should have let them go chapter 11. Plenty of folks with responsible finances could have bought up the assets.
  - collyw 10y ago
    It happened to banks outside the US, where they weren't guaranteed (but did get bailed out).

ddeck 10y ago

>This is quite unfair to the public shareholders. Admittedly they may not be the same shareholders, but let's not forget that Fannie/Freddie shareholders have benefited untold billions pre-crisis by being able to fund for years with an implicit government guarantee that was never paid for. http://www.federalreserve.gov/pubs/feds/2005/200505/200505pap.pdf http://www.federalreserve.gov/pubs/feds/2005/200505/200505pa...

pcarolan 10y ago

It wasn't news to any public investors that Fannie/Freddie is a quasi-governmental organization. Investors angered that they can't reap the rewards without paying for past/present/future risk and bad debt are also asking for more than they deserve. They were betting that they could spin off the government's stake after the government did their dirty work for them. The stock price should have been their signal that the government was wiping out that hope.