There's no mechanism in place for Fannie or Freddie to repurchase any of the government-held preferred shares, and they can't rebuild capital anyway, because of the required dividend sweep.
Following their March dividend payments, Fannie and Freddie will have paid the government total dividends of $199 billion on government investments totaling $189.4 billion. Factoring in warrants that were handed to the government to acquire up to…
It's no wonder that so many investors holding common and/or junior preferred shares of Fannie and Freddie -- the most high-profile being Fairholme Funds, led by Bruce Berkowitz -- have sued the government demanding a seat at the table.
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Please see Were Fannie, Freddie Negotiations Done in Good Faith?, for a full rundown of years of events leading to the current impasse over the GSEs.
In an interview with Dan Freed on Thursday, consumer advocate Ralph Nader - a GSE shareholder - discussed why he thought the Obama administration was likely to "just run out the clock to 2016," leaving the Fannie and Freddie battle unresolved, as the continued flow of dividends helped lower the federal budget deficit.
Other recent Fannie Mae and Freddie Mac coverage:
Fairholme Leans on Fannie and Freddie Directors
Fannie and Freddie Plaintiffs Eye FDIC Share Sales
Fannie Mae's common shares were up 0.9% in early trading Friday, to $5.50, while Freddie Mac's common shares were up 0.8% to $5.33. Shares of Fannie have risen more than 18-fold over the past year, while Freddie's common shares have risen more than 16-fold.
This chart shows the remarkable run for the GSEs' common shares over the past year: data by YCharts California Banks Are Sitting Pretty, Says KBW A 'Compelling' Case for JPMorgan's Stock Follow @PhilipvanDoorn