Fannie and Freddie shares up again
TEXT OF STORY
Kai Ryssdal: Today was a rich day to go trolling through the Securities and Exchange Commission Web site. Just a couple of clicks of the mouse got you this little tidbit: Freddie Mac chairman and CEO Richard Syron’s total compensation package last year came to almost $20 million. We should probably point out here, the company’s shares lost half their value in 2007.
And speaking of shares, there was this: A request from Freddie Mac to sell $5.5 billion worth of stock. Congress is still negotiating a bailout plan for Fannie and Freddie. The companies insist they’ve got enough capital to cover their debts. And they’re trying to avoid relying on a government handout. Our Washington Bureau Chief, John Dimsdale, reports.
John Dimsdale The day started with headlines that Freddie wants to sell as much as $10 billion in new shares to head off a government rescue. Freddie’s actual filing was for a little over half that. Freddie — and Fannie’s — stock price rose for a third straight day, which shows investors still like what they see, says Walter O’Haire, a stock analyst with the financial research firm Celent.
Walter O’Haire: Once the market accepts that things are turning around, those who’ve taken the risk early on are rewarded.
But, with a possible government takeover looming, Hans Stoll, with Vanderbilt’s Financial Markets Research Center, says Fannie and Freddie’s shareholders are taking an extra gamble.
Hans Stoll: But if it comes to the situation where Freddie Mac goes under, I don’t think the existing shareholders should be bailed out. Which is a risk to existing shareholders or the one who would participate in this new issue.
But investors have one thing in their favor. The SEC Monday will limit the short-selling of Fannie and Freddie, reducing the number of bets that the stock price will fall.
In Washington, I’m John Dimsdale for Marketplace.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
