This means that Fairholme, along with "thousands" of shareholders (voters) would be quite pleased to see the government's senior preferred shares in Fannie and Freddie converted to common shares. A similar action was taken for AIG, enabling the insurer to move past its bailout, the government and the Federal Reserve both claiming significant profits.
George isn't buying this argument either: "The
The analyst also sees the scenario of Fannie and Freddie simply continuing to operate following a conversion of government preferred shares to common shares, as "politically unpopular."
"The political objection would be that hedge fund managers should not benefit to the detriment of taxpayers, the government, and government programs for the poor," he wrote. "Congress, especially Democrats, would find it difficult to explain to constituents why the government has to raise taxes or cut spending on programs like food stamps or Medicare while institutional investors are benefiting from the rescue of Fannie and Freddie."-- Written by Philip van Doorn in Jupiter, Fla. >Contact by Email. Follow @PhilipvanDoorn