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Federal National Mortgage Association Message Board

  • fidelity111 fidelity111 Sep 7, 2009 7:59 PM Flag

    most bankrupt company to ever trade in the stock market

    Not in history of mankind has a company with negative $60 billion common equity been allowed to trade on public markets. The chance that Fannie or freedie will be able to pay back the $60 billion in preferred stock which is ahead of the common shares is about 1 in a billion.

    It is a travesty to the markets that these stocks are even allowed to trade. Anything higher than 10 cents is too high IMHO.

    These companies never makde $60 billion in good times when they had tens of billions in positive net equity with which to try to make a return.

    I know alot of folks here do not understand accounting. But try to understand this. Fannie and Fredie have negative $60 billion to work with to try to make a return. And they are required to pay dividends on this $60 billion which means even if defaults decline to near zero, they still will barely be able to clear the quarterly dividends on preferred stock that is owed to the government every quarter.

    Common shares are not allowed to pay a dividend and are worthless until the government is paid back. it would take 30-60 years in the best of times to earn enough to pay back the gvt... and that is if they had positive equity...But they don't have that so really it is implausible they could ever make $60 billion in a milenium going forward.

    More than likely, these cos will be reorganized in the next few years, long before the 1000 years it will take for them to ever make $60 billion and pay back the government.

    Furthermore, the $60 billion owed in form of preferred...will likely increase to $80-$100 billion in the coming 18 months.

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