Fannie Mae and Freddie Mac shareholders deserve respect. They have been silenced, used, and abused by the federal government.
When the government initiated the conservatorship of Fannie Mae and Freddie Mac, shareholders lost their voting rights, dividends on preferred and common stock were suspended, and annual shareholder meetings were canceled.
The government sponsored enterprises (GSEs) have returned to profitability, but their shareholders with zombie stock remain without rights or remedies, and with no opportunity – as given to bailed out Citi and AIG shareholders – to share in the recovery of value that is likely for Fannie and Freddie.
Many of the GSEs’ shareholders are small investors, who were told for years that their investment was the safest one after U.S. Treasury bonds.
Legislation currently in Congress – the PATH Act (H.R. 2767) in the House, and the Corker-Warner bill (S. 1217) in the Senate – does not address how to deal with Fannie Mae and Freddie Mac shareholders.