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Banking, finance, and taxes

A Government Bail-Out Of Fannie Mae (FNM) And Freddie Mac (FRE): Shareholders Get Nothing

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By Douglas A. McIntyre Published
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It has started to look like a pattern. A financial company gets in trouble. It stocks falls. The shareholders take a haircut. Sometimes that haircut is 60% and sometimes the stockholders end up bald.

The US government is at least thinking of taking complete control of Fannie Mae (FNM) and Freddie Mac (FRE). If their financial situations get worse, the Feds reasons that the entire global financial system could take on water. Paper from the two firms is held by banks and brokerages from here to Timbucktu.

What the government may not have looked at closely is the $60 billion in shareholder wealth which will disappear if the two lending underwriters fail. The Fed has bailed out banks and brokerages without taking away all of the value of their stocks. Is it too much to ask with FNM and FRE?

Someone has to pay for bad corporate decisions. Why not the shareholder who had nothing to do with the errors.

Douglas A. McIntyre

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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