Saturday, September 6, 2008

Fannie Mae and Freddie Mac to be Taken Over by Federal Government

News of Fannie Mae and Freddie Mac being placed under Fed control has been reported. The plan would put both companies under conservatorship.

This was discussed in a meeting that included Paulson, Ben Bernake, James Lockhart, Daniel Mudd (CEO, Fannie Mae) and Richard Syron (CEO, Freddie Mac)

Under the plan, the executives will be replaced, shareholders wiped out, and billions of taxpayer's money used to bail out the ailing companies.

It was known that senior officials were critical of top executives of the both Fannie Mae and Freddie Mac whose executives had received huge compensation packages. For instance, Syron had alone collected some $38 million in compensation since he joined the Freddie Mac in 2003!

The shares of Fannie and Freddi have plummeted this year to worrying lows.

What is unfair about this whole situation is that billions of tax payer's money will be used to bail out failing corporations. Jim Rogers, an investor who moved to Singapore in 2007 is against the idea of bailing out these 2 corporations. Do look at his views here.

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