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Fannie Mae and Freddie Mac: Obama Losers (Update 1)

Fannie's preferred Series S shares (FNMAS), with a face value of $25, were down 4.5% to close t $4.87. The shares closed at just $1.67 on Dec. 31. Freddie Mac's preferred Series Z shares (FMCKJ), with a face value of $25, were down 3% to close at $4.95. Freddie's preferred Z shares closed at $1.75 at the end of 2012.

Senators Mark Warner (D. Va.) and Bob Corker (R., Tenn.) in June introduced legislation to wind-down Fannie and Freddie over five years, privatize most of the U.S. mortgage market, while putting in place a limited government backstop in the form of a "Federal Mortgage Insurance Corporation (FMIC), modeled in part after the FDIC." The Federal Deposit Insurance Corp. insures bank deposits by charging premiums to all U.S. banks and savings and loan associations.

FBR analyst Edward Mills, in a note on Tuesday, said the president's speech was likely to be "all but an endorsement of the Corker-Warner GSE reform proposal and would make any efforts at a recap of Fannie Mae and/or Freddie Mac even more unlikely."

But investors' battle with the government over Fannie and Freddie is far from over. The lawsuits challenge the legality not only of the revised bailout agreement, but of many aspects of the bailout, including its timing in 2008.

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-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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SYM TRADE IT LAST %CHG
BAC $15.27 -0.78%
FNMA $2.36 0.43%
FMCC $2.27 -0.44%
FMCKJ $4.16 1.46%
FNMAS $4.16 0.97%

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