Fannie and FreddieThe two companies -- known as the government-sponsored enterprises, or GSEs -- hold about $5.2 trillion in assets, mainly consisting of mortgage loans and mortgage-backed securities. They were taken under government conservatorship in September 2008. The government's preferred stake in Fannie and Freddie came to a combined $189.4 billion as of March 31. Following GSE dividends paid to the government in June, Fannie and Freddie paid a combined $131.6 billion in dividends to the Treasury. Institutional and individual investors holding common shares and junior preferred shares of Fannie and Freddie have filed multiple lawsuits against the government, with the aim of recovering some value. Under their modified bailout agreements, Fannie and Freddie are required to pay all profits to the government, in excess of minimal capital buffers of $3 billion apiece. The GSEs are not allowed to redeem any government-held preferred shares. Non-government shareholders of the GSEs have been taken on a wilde ride this year. Fannie's shares traded for 26 cents at the end of last year, and rose to an intraday high of $5.44 on May 29. The companies' junior preferred shares have also been quite volatile, with investors hoping that their senior position to the common may make them a decent long-term investment because of their great discounts to par value.
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