(Wall St Journal-Deal Journal Blog) The fates of Fannie Mae and Freddie Mac reportedly hang over meetings of the Federal Reserve. As the government considers its options for the two mortgage giants–nationalization, restructuring or just plain nothing–it is becoming clear that telling shareholders to jump in a lake is a bigger problem than it first seemed: big holders of Fannie and Freddie securities range from banks to foreign governments, and wiping out the value of their investments risks deepening the stress on the wider financial-services industry.
The Financial Times points out today that regional banks hold $36 billion of the preferred stock in Fannie Mae and Freddie Mac. Dealbreaker’s John Carney noted that the Fed is pressuring the Treasury not to wipe out shareholders because it could hurt regional banks that already are under pressure.
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