So it looks like Fannie Day is finally approaching. The Wall Street Journal is reporting that a plan to shore up Fannie Mae and Freddie Mac could be announced as early as this weekend. No details of the plan are available, although the Journal says it is "expected to involve a creative use of Treasury's new authority to make a capital injection into the beleaguered giants."
Anyone want to take a guess about what the "creative use" might involve? Whoever gets it right will win the admiration of DealBreaker's readers and lunch with Bess Levin. (Yes, we'll pick up the tab.)
Update: Pimco's Bill Gross, who has been urging the Treasury to act, just said he couldn't comment about whether he's been asked about buying new debt or preferred stock that might be issued as part of the rescue plan. We'll take that as a yes.
Update II: Here's what Pershing Square Capital Management's Bill Ackman suggested the Fed do to rescue Fannie and Freddie.
Posted by guest , Sep 05, 2008 5:09PM
T explicitly guarantees all outstanding agency debt.
Bess, we'll be dining in the jacuzzi in the back of my Humvee limo. Carney, I'll spring for the corndogs. B, let me know what you'd like for dessert.
Posted by guest , Sep 05, 2008 5:10PM
In exchange for Taiwan (and a country to be named later), the Chinese will purchase 1.5 trillion dollars of super-duper preferred equity. Besides taking the load off of Fanny, it will re-inflate the housing bubble causing McCain to be elected (praise Jesus!)
Posted by guest , Sep 05, 2008 5:13PM
"take the load off Fanny". best line of the day
Posted by guest , Sep 05, 2008 5:16PM
Treasury will guarantee debt, take a big preferred position that subordinates existing preferred. No idea what happens to the common.
Posted by John Carney , Sep 05, 2008 5:18PM
@2: So good I'm lifting it for the headline. Great work.
Posted by bank_teller , Sep 05, 2008 5:29PM
T gonna buy the maturing debt as necessary to close the issue.
Posted by guest , Sep 05, 2008 5:36PM
1 here,
if T guarantees all debt, why would they need anything else?
Posted by guest , Sep 05, 2008 5:37PM
and they'll put the load right on me
Posted by guest , Sep 05, 2008 5:41PM
http://www.businessweek.com/investing/insights/blog/archives/2008/09/take_a_load_off.html
Posted by guest , Sep 05, 2008 5:44PM
Creative use: Paulson is going to plaster Dan Mudd with sticky $50 bills.
Posted by diablo , Sep 05, 2008 5:45PM
Carney, you are pimping Bess. She's not going to go out with any of the stalkers here. You know that.
Posted by guest , Sep 05, 2008 5:53PM
Should people cover their FRE/FNM short or wait it out?
Posted by guest , Sep 05, 2008 5:58PM
"Due to"? That's not a typo, that's just mocking grammar.
Posted by guest , Sep 05, 2008 6:26PM
Treasury will wipe out common shareholders. Can't wipe out the pfd holders as that would hurt the regional banks who own the pfd. Since JPM already took a 50% hit on their pfds they will knock that down a bit. Treasury comes in with new convert pfd shares that effectively makes the existing pfds worth 40.
Posted by Nemo , Sep 05, 2008 6:34PM
New issuance of preferred shares, backstopped by bazooka, with holders of the existing preferred given an option to participate proportional to their holding. New preferred placed on equal footing with existing to avoid clobbering the regional banks.
No explicit guarantee for the bonds, because the implicit one is enough.
Common shareholders have seen their last dividend.
Posted by guest , Sep 05, 2008 6:50PM
need to see pic of bess before I give THE right answer. Though sticky 50s above was good.
Posted by guest , Sep 05, 2008 7:07PM
(G)Ackman's proposal is ridiculous on its face. Wiping out the preferred holders would make many regional banks go away.
Posted by guest , Sep 05, 2008 8:04PM
take a load of fannie and put the load on *whom?*
Great title. Just when I think I hate this place, I love it again.
***
I read somewhere that Bill Gross is going on a hunger strike until the Fed rescues the ailing NGOs or IGEs or whatever it is they are.
Posted by guest , Sep 05, 2008 8:05PM
off, not *of*. Crap, I wish we could edit.
Posted by guest , Sep 05, 2008 8:08PM
***
Paulson Meets With Bernanke, Fannie, Freddie Chiefs (Update1)
By John Brinsley and Dawn Kopecki
Sept. 5 (Bloomberg) -- Treasury Secretary Henry Paulson met with regulators and executives of Fannie Mae and Freddie Mac today amid speculation the Bush administration is near completing a plan for an injection of government funds in the companies.
***
7:54 edt. While you amateurs are out drinking and trying to get laid, the professionals DELIVER.
Oh, shouldn't you be trying to cover your shorts?
Posted by guest , Sep 05, 2008 8:09PM
"FHFA spokeswoman Stefanie Mullin declined to comment, as did Mark Lake at Morgan Stanley. "
See that? They declined to comment. You know what that means....
Posted by guest , Sep 05, 2008 8:13PM
0h, 3 and 8...I see you guys are not amatuers. I see you're 45 +. I see that the interns don't talk to you (think "Hey Nineteen") and that YOU'RE probably already falling asleep in frong of the Big Screen.
***
Oh, anyway, DB, that "firedog" ad is about the best internet ad I've ever seen. Very lame subject, but very catchy ad. You might to get your friends at GS to take firedog public, so you can get a piece of the bridge loan and some 144. Do they still do that these days?
"hey nineteen, that's 'retha Franklin..."
Posted by guest , Sep 05, 2008 8:13PM
i'm going to cover bess with sticky 50s
Posted by guest , Sep 05, 2008 8:15PM
after 23, I'm leaving.
Posted by guest , Sep 05, 2008 8:16PM
@24- why?
Posted by guest , Sep 05, 2008 8:17PM
@diablo- bess would, if carney promises to only do 2 palin posts/day, which I know she hates.
Posted by guest , Sep 05, 2008 8:20PM
@ 23, you know, there's this reference to "taking a load of Fannie," and, like, it's a song, and like, the next line goes, "aaaaa -- aaaaa -- aaAAND you put the load put the load right on ____" [insert proper noun]
...and if you count you'll see I used 4 (four) underscore characters...
I thought this might help you express yourself.
Posted by guest , Sep 05, 2008 8:21PM
only it's "off," not "of." Like, "Take a load OFF Fannie..."
Posted by guest , Sep 05, 2008 8:23PM
So like, you say, "I'd like to put the ____ right on ____."
And everyone who reads this -- basically two of us -- will think, 'ha. clever.'
And Bess, who apparently has heard the song (right?) will be *eating out of your hand.*
Posted by guest , Sep 05, 2008 9:06PM
@29 girl loves that song
--junior yr neighbor
Posted by guest , Sep 05, 2008 9:28PM
impressive powerpoint presentation from pershing. they must know their shit.
Posted by guest , Sep 05, 2008 9:47PM
Bill Gross, speaking for Hank Paulson, as quoted in Bloomberg:
***
``The Treasury wants to get in front of this and to inject some capital before the markets tend to take it the wrong way,'' Bill Gross, manager of the world's biggest bond fund at Pacific Investment Management Co. in Newport Beach, California, said in a Bloomberg Television interview, referring to the capital assessment.
***
Well, look, BofA and Countrywide write the "foreclosure prevention act" so why not Bill Gross scripting Treasury?
Posted by guest , Sep 05, 2008 9:53PM
@ active imagination, cute reference, but politically clueless.
your boy and his backers seem to be the main beneficiaries of the mortage industry generosity.
Posted by guest , Sep 05, 2008 9:57PM
The NY Times is reporting that F & F are being placed in conservatorship.
Posted by diablo , Sep 05, 2008 10:39PM
NYT link:
http://www.nytimes.com/2008/09/06/business/06fannie.html?_r=1&hp=&pagewanted=all&oref=slogin
ARS is getting the scoop. Announcement before 7 PM EDT Sunday?
Posted by guest , Sep 05, 2008 10:48PM
Good news for them i guess, will hear before then definitely
http://www.orgod.com
Posted by guest , Sep 05, 2008 11:14PM
1 clearly wins. Congrats!
Posted by guest , Sep 06, 2008 6:00AM
@17
which is the whole fucking point as he's short the regional banks
Posted by guest , Sep 06, 2008 7:10AM
PIMPco.com
Posted by guest , Sep 06, 2008 11:04AM
Bill Gross is not worried about our country's financial system, he's worried about Allianz!
Posted by Investorcluzo , Sep 06, 2008 11:37AM
the unwashed masses predicted that the debt was safe. the wsj is now suggesting that the common will be "diluted" (as opposed to wiped out). the question, which seemingly will be answered shortly, is whether or not fnm and fre go for more than the $2 bsc fetched. in the immortal words of "johnny" from better of dead, I want my $2!
http://www.youtube.com/watch?v=mXIBjo8gWEE
while I see no reason for saving the common shareholders, there would be severe unintended consequences if they gave the preferred holders a big goose egg too. it's time to call a spade a spade.
Posted by SamHouston , Sep 06, 2008 10:41PM
All your bank are belong to us
Posted by guest , Sep 07, 2008 1:29AM
Another one of FDR's socialist schemes comes crashing down. Yet, this is just foreplay. Watch out for the ass-raping the day social security and medicare need to be similarly bailed out - and the day you all of a sudden realize 'accounting inconsistencies (read 'fraud') in those entities.
This is mindblowing. Corporations are criminally indicted for fraud a fraction of this whereas the politicos who run these agencies get away with only being fired (and later getting hired into presidential campaigns!)
And to imagine Obama is proposing MORE socialist schemes in the name of 'jobs banks'? When will the socialists learn - IT DOESN'T WORK!
Posted by guest , Sep 07, 2008 8:47PM
Guest @ 1:29AM
Who's the socialist here? Who buys -underwrites- the crap? FDR or the Bush-boy? Who provided for another 150bln of asset growth before they shut them down, so the banks can nail you better? Bush-boy! Who are the airheads that couldn't get enough leverage? FDR boys or Wall Street?