Div. on FNM-S declared by Board of Directors in August, ex-date 9-11-08, payable 9-30-08 has been removed from www.fanniemae.com website (revised 9-7-08). Not only did the government make our investment nearly worthless they also take back a div. already declared by fannie's Board of Directors. I have never before heard of a div. not being paid after declared by a Board of Directors. Oh, the power of governments!!!!!!
I reread the TREASURY SENIOR PREFERRED STOCK PURCHASE AGREEMENT and it reads The following covenants apply to the GSEs as part of the agreements. Without the prior consent of the Treasury, the GSEs shall not: Make any payment to purchase or redeem its capital stock, or pay any dividends, including preferred dividends (other than dividends on the senior preferred stock)
I read the above to mean we will not get the declared dividend.
The treasury can use the consent of the Board of Directors to justify in essence confiscating assets but at the same time nullify a decision made by the Board of Directors about a dividend payments. As a matter of fact the common share got their reduced dividend (announced at the same time) so this may be a historical first when preferred shares are treated worse than common shares.
Of course all bank pfds took a hard hit yesterday courtesy of Paulson that highlighted the dangers of investing in non-cumulative pfds and relying on the too big to fail theory.
In essence C ,WB and MER pfds lost another 10 % in value (already down 20% from recent IPO prices) are now almost shut out from raising capital with pfd issues.
If smaller banks also hold bank pfds they will now have to show more losses.
pfd an interesting play...if housing can stabilise, this will do very well. even the POS common will have some life left in it IMHO. Good luck longs, we were screwed by everyone. As for my handle, i'm looking forward to Mccain/Palin replacing Dubya.
There is one ray of hope for all the PFD
and that is the amount of this junk that is one the balance sheet of all sizes of banks. I even found it on the Vanguard MM
I just bought a small amount of the S to see what happens.
The big robbery was the pfds thereby not having to pay interest on 39 billions worth of them and on top of that of course keeping all the money that helped the GSEs meet capital requirements when the going was tough. Thank you Uncle Sam for protecting naked short sellers and even covered shorts being allowed to destroy shareholder value in something they did not/do not own.
Sorry to you idiots who think it is fair that the preferred dividend not be paid. As a former CFO, let me tell you that NEVER is a new preferred series (such as the one Paulson pirated) superior to a previous preferred series. At most, the new series is pari passu (i.e., equal status to the previous series)....never superior to the previous series. This clause is usually in the Prospectus of the former series...when I get the time, I'm going to find it. The Treasury Dept is not above the law. Stay tuned...
actually AHM did that trick too. The government should be out dealing with the fraud from things like AHM and not ripping off its citizens to the tune of 36 billion. I'll tell you, at least I no longer have to do jury duty anymore. I can't wait for the next time they call me and they ask why I can't serve. I bet the judge craps his pants when I say sir, I don't believe in the US government because they seized 40K from my family. But your honor, please call me when that trial comes up so I can vote guilty.