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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: mishedlo who wrote (84710)	9/6/2008 7:25:35 PM
From: XBrit	Read Replies (1) of 116555

Barney Frank just confirmed that the preferred shares and subordinate debt of Phony and Fraudy are toast. NYT was right, WaPo was wrong. WSJ is also now reporting that the preferred dividends will be suspended forthwith. That may not go down too well in the market tomorrow. "This is no bailout, particularly for the shareholders", Frank said. The federal government "will be senior to all shareholders, preferred and common". Holders of the companies' corporate debt and preferred shares are "very unlikely to come out of this at all happy", and the chief executive officers will be forced out, Frank said. Paulson met with Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron yesterday to tell them of the decision to put the companies into conservatorship, and remove the executives from their jobs, according to two people briefed on the discussions." bloomberg.com "Dividends on the companies' preferred stock are likely to be suspended, people familiar with the plan say, and those on common shares to be eliminated. Any injection of capital by the Treasury would likely greatly reduce or wipe out the value of common shares currently outstanding." online.wsj.com

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