William Ackman on Fannie & Freddie

Unveiling his plans to save the lenders, with William Ackman, Pershing Square Capital Management managing partner

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"This is a conservatorship, which is a good thing, because you can accomplish it more efficiently," Ackman said.

Part II
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Ackman: A Plan to Save Fannie & Freddie
CNBC.com | 15 Jul 2008 | 10:30 AM


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  1. simon commented on Jul 17

    Not that I’m a merchant banker but I recognize some similarities between this proposal and one written up by Nouriel Roubini on his blog. NR’s proposal had a 5% hair cut for the bond holders and reduced the spread compared to treasuries to parity thereby gaining 50b in profits?? for two GSE’s. Probably a better option given NR seems to be a genius.

  2. Reggie Theus commented on Jul 17

    This is like watching someone create money for himself just by talking and everyone in the world instantly accepting that it is money.

    This market is so desperate for thought leadership that it is willing to engage the fanciful notion that “new equity” is created simply by removing the old debt.

    Mr. Ackerman is a nice looking gentleman, and his calm is so desperately needed right now that the markets appear to be eating it up without thought about the reality of the matter. The simple truth is that he is doing nothing but using an eraser to create a new balance sheet.

    This has resulted in a feel-good rally, but the ultimate nature of the farce will play itself out.

  3. chris commented on Jul 17


  4. john_doe commented on Jul 17


  5. bonghiteric commented on Jul 17

    Imagining you can convince the foriegn holders of the debt to take the haircut and take equity without some form of political cost.

  6. malabar commented on Jul 17

    Many of these are self-serving plans wether its Hank&Bennie’s or Ackman’s.

    If the majority of people believe that capitalism does not work for housing and that taxpayers ought to be the financier of choice for home mortgages then the treasury should directly manage a home mortgage finance dept. Fannie and Freddie should be closed – shareholders should get zip and bondholders and preferred holders should be paid what the underlying assets would fetch in the open market on liquidation.

    You can’t have a system where agencies are created and bonds issued with offering memoranda clearly stating that the treasury does not guarantee those bonds and as a result with a higher coupon and then turn around and say no its actually as good as Tbonds. That’s fraud! Defrauding middle class Americans.

    I also believe Franklin Raines, Jim Johnson and all the other Fannie/Freddie executives need to be investigated by a special prosecutor/grand jury and if laws were broken they should be prosecuted to the fullest extent of the law. Why do we need a special prosecutor? Because the Cox and the SEC refuse to do their duty. We can’t have a dual system with laws for the average folks and no laws for the country club boys.

  7. ssm commented on Jul 17

    Larry Kudlow keeps shouting the line ‘new socialism’ or something like that and declaring that ‘nobody fails’ … will somebody tell me why I would want to buy ANY equities in financials considering that we now know that any holder of common stock in financials is the first to be told in a restructuring that they can kiss their equity goodbye?

    In Ackman’s world if you were paid a dividend on your stock in Fannie or Fredie then you are ripe to have your principal equity stolen from you by bad management, implied government guarantees, and jerks like Ackman who want their shorts to make him far more money than any dividend earner was ever paid.

    I despise these criminals.

  8. mortgage man commented on Jul 17

    Ackman is a thief. But not a successful one. Target is way down and he is chasing it. Fannie and Freddie will rally and rip his face off. His firm has not the analytic capability to model the peformance of the GSE’s book. However, they do undestand that if they can manipulate the market, their shorts will be worth $$$$

  9. Clark Jenkins commented on Aug 20

    These posts are quite entertaining to read a month after they were posted. Today, 8/20/2008, Freddie closed at $3.25, down 22%, Fannie closed at $4.40, down 26.7%. The only thing that is truly amazing now is that there is any money left in the price of the stocks. Barron’s came out over the weekend, stating what was always obvious to anyone who took beginning accounting. When a company goes bankrupt, the shareholders’ get nothing.

    If for some reason you are actually reading this in a timely manner, a few of the big oil companies look very attractive as oil has stopped going down. Condider E, BP, and RDS.A and make some money.

    Clark Jenkins

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