I'm confused. how can governmebnt take over comany without buying their shares?

can I take over a company without buying their shares?

what happens to fanie and freddie shares, do they continue to trade?

yes but they're not paying dividends to ordinary shareholders hence nobody wants em so worth jack sh1t.

nalin

brut said:

can I take over a company without buying their shares?

what happens to fanie and freddie shares, do they continue to trade?

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Both the companies pay dividends to the Government. That gets stopped.

Both will issue Senior Preferred Stocks to the Government, so that in essence is a pumping in of funds and a takeover of the companies.

So in essence the Government takes over the bad assets and funds the money required by the foreign buyers(Japanese-NOMURO Corpn for example) of the mortgage bonds. In essence they get 1/2-1% less on their earnings after the Government takes over, atleast their holding dont become junk which would have been the case if the companies did not get taken over and were allowed to flourish the way they have been.

The shares will continue to get traded I suppose, only they will get diluted and therefore their value is almost nothing, especially since 79% of the company is being bought over by the Goverment(THE HOUSE FINANCE thing that got cleared in May in US Congress-Paulson being the chair on it).

However, if the mortgages get sold over a years time and they end up in profit, then so does the government for the risk that they are taking and also the existing shareholders who will most probably hold onto their shares.

My boss was telling me a few weeks ago how he'd brought $100K of Freddie & Fannie on a recent bounce. It was around $5-6 when he was telling me about how much he was down. He'd actually changed the password on their trading account so his wife wouldn't find out.

My advice was to take the hit - I have no idea if he did or not - but they are close to worthless now.