Zombie Institutions: Fannie & Freddie To Be Placed Under U.S. Conservatorship - Shareholders To Be Completely Wiped Out

"The last thing you want to do is give a distressed borrower more time, because when people are in distress they tend to take a lot of risks," he said. "You don't want zombie institutions floating around with time on their hands."

NY Times: Freddie, Fannie Shareholders To Be Wiped Out

Submitted by cpowell on Sat, 2008-09-06 01:58. Section: GATA Daily Dispatches GATA Be In It To Win

U.S. Rescue Seen at Hand for 2 Mortgage Giants

By Stephen Labaton and Andrew Ross Sorkin
The New York Times
Saturday, September 6, 2008

http://www.nytimes.com/2008/09/06/business/06fannie.html?_r=1&hp&o

WASHINGTON -- Senior officials from the Bush administration and the Federal Reserve on Friday informed top executives of Fannie Mae and Freddie Mac, the mortgage finance giants, that the government was preparing to seize the two companies and place them in a conservatorship, officials and company executives briefed on the discussions said.

The plan, effectively a government bailout, was outlined in separate meetings that the chief executives were summoned to attend on Friday at the office of the companies' new regulator. The executives were told that, under the plan, they and their boards would be replaced, shareholders would be virtually wiped out, but the companies would be able to continue functioning with the government generally standing behind their debt, people briefed on the discussions said.

For entire New York Times article

U.S. Near Deal on Fannie, Freddie

Wall Street Journal article

The printing presses will be breaking the speed of sound very soon - Johnny