'Fast Money' Recap: Gaming the Fannie Plan
09/05/08 - 07:20 PM EDT
TSC Staff
Melissa Lee hosted CNBC's "Fast Money" Friday night. She started the show with a discussion on late-breaking news that the Treasury is planning to backstop Fannie Mae(FNM Quote - Cramer on FNM - Stock Picks) and Freddie Mace(FRE Quote - Cramer on FRE - Stock Picks). The plan would include changes to senior management.
Steve Liesman, senior economics commentator for CNBC, joined the traders to discuss the plan by the Treasury to inject capital into the two companies. He said the rumors on the Street are that the Treasury will offer a convertible preferred or a warrant offering. Guy Adami asked Liesman if the stocks are going to zero. Liesman said he was unsure and said we're back to where we were before on these equities. If the government wipes out the preferred holders, it will create other problems in the banking sector, he added. Pete Najarian said the problem is that we don't have enough clarity on what this means for the Freddie and Fannie shareholders. Jeff Macke added that both stocks are screaming sells, along with the Financial Select Sector(XLF Quote - Cramer on XLF - Stock Picks) and SPDR Trust(SPY Quote - Cramer on SPY - Stock Picks). Adami mentioned that if the backstop of Fannie and Freddie can lower mortgage rates, the entire problem could begin to unwind itself. Karen Finerman said the plan is bad for the Treasury and bad for the U.S. dollar. The Tech Beat Lee moved the discussion over to the technology sector. Finerman said she likes Nokia(NOK Quote - Cramer on NOK - Stock Picks), but she didn't like that the company warned on earnings today. Macke pointed out that Google(GOOG Quote - Cramer on GOOG - Stock Picks) got crushed all week, and the stock isn't working.
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