Ralph Nader Is Right

http://www.futureofcapitalism.com/2011/01/ralph-nader-is-right

Ralph Nader has a piece in the Wall Street Journal telling the story of how the government (he largely lets the directors off the hook) has abused Fannie Mae's common shareholders, of which he is one.

In return for providing an open credit line, the government received warrants to buy up to 79.9% of the GSEs' common stock for $0.00001 per share. The government's share stayed under 80% to avoid forcing the liabilities of these two behemoths onto the government's books. Treasury achieved this by having the common shareholders nominally own the other 20%.

Here's the rub: The zombie common shareholders have no rights or remedies against Fannie and Freddie, both operationally active companies, or their regulator—the Federal Housing Finance Agency. FHFA ordered the Fannie and Freddie boards and executives to suspend communications with shareholders and abolish the annual stockholders meeting.

by Ira Stoll  |  Jan 26, 2011 at 10:25 am Related Topics:  Fannie Mae, Henry Paulson, Housing, Timothy Geithner receive the latest by email: subscribe to the free futureofcapitalism.com mailing list