Last Updated on September 9, 2008 by stlplace
(Update, according to WSJ) The deal in summary: the US treasury dept. will put up to 200 billion ($100 billion each) to support the mortgages loss from Fannie and Freddie; the treasury will buy $1 billlon of preferred shares for 10% divivend, the preferred are senior to all other preferred previously issued (I believe all the other preferred holders won’t have much left); the treasury will have warrant to buy FNM and FRE up to 79.9% of company common stock for a nonimal (i.e. the current shareholders such as Legg Mason, Dodge Cox mutual funds will be diluted 1:5 after recent big stock price drop).
(Source: Yahoo Tech-ticker)
It appears the direct cause of the bailout is Chinese and Russian goverments are no longer willing to buy the debt of Fannie/Freddie. So what US goverment did is “all right, we will eat our own dog food”, and hopefully Chinese and Russians will follow.
Did China got a deal?