Preferred and common stock of Fannie Mae and Freddie Mac soared after four senators proposed legislation related to the mortgage financiers that were placed into government conservatorships in September 2008.
Fannie Mae’s 8.25% preferred shares climbed to $2.92 as of 12:58 p.m. in New York from $2.08 on March 13, reaching the highest since the month of its bailout, when dividends on the notes were suspended. The Washington-based company’s common stock rose to 35.4 cents, a 13-month high, from 29.2 cents.
The securities may be worthless unless the companies can pay off the funds they owe to taxpayers or see their bailouts reworked. Lawmakers including
“It’s not clear why” the “Treasury would sell the preferred or why anyone would want to own it,” Jim Vogel, an analyst at FTN Financial in Memphis, wrote in a note to clients.
The Treasury bought $187.5 billion of senior preferred shares in the two companies to help them remain solvent. The government, which starting this year will be paid any profits they make under a revision to their bailout agreements in August, also owns 79.9% of their equity.
Fannie Mae also said yesterday it expects to report “significant net income” for both the last quarter of 2012 and the full year. It will miss a March 18 deadline for reporting more details on the earnings as it analyzes how to handle some deferred tax assets, the company said in a securities filing.
