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(an email exchange)

>   
>   On Sun, Sep 7, 2008 at 8:33 PM, Mike wrote:
>   
>   
>   In exchange the Treasury receives a quarterly fee, dividend payments and
>   ”warrants representing an ownership stake of 79.9% in each GSE going
>   forward.”
>   
>   Support of Agency MBS market: The Treasury will set up an investment fund
>   to “purchase Government Sponsored Enterprise (GSE) mortgage-backed
>   securities (MBS) in the open market.” The scale of this program is yet to be
>   determined. The Treasury noted that it “is committed to investing in agency
>   MBS with the size and timing subject to the discretion of the Treasury
>   Secretary. The scale of the program will be based on developments in the
>   capital markets and housing markets.” This should eliminate the majority of
>   investor concerns about the functioning of this market, improve liquidity and
>   lower borrowing costs.
>   
>   Credit facility: The Treasury has agreed to create a back-stop short-term
>   lending facility for the Agencies. In light of the other programs being put into
>   place, this seems unlikely to be utilized, in our view.
>   

Shareholders give up 79.9% of their residual value as the agencies wind down.

Must have been some technical reason the government used that % and left the shareholders just north or 20%.


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