Bye Bye Banks: Freddie and Fannie Preferred Holders to Take Big Hits? | WHAT REALLY HAPPENED


Bye Bye Banks: Freddie and Fannie Preferred Holders to Take Big Hits?

Lots of small and mid-sized banks in the U.S. have, with encouragement from regulators, built up big holdings in Fannie and Freddie preferred stock, which they use to satisfy their capital requirements. If Fannie and Freddie preferred shares become worthless, a lot of banks will become insolvent. Which, with the FDIC insurance fund already being depleted by bank failure, could end up costing taxpayers a ton.

Webmaster's Commentary: 

So, those of us who avoided the real estate bubble, who refused to get suckered in with dreams of vast wealth magically appearing out of nothing if we would only re-finance one more time, we still get stuck with the losses, right?

"The poor are always made to pay for all." Brother William, "The Name of The Rose" Umberto Eco

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