Fannie Mae and Freddie Mac are still hot stocks and Bruce Berkowitz is ready to help with increasing shareholder value for himself and others. This was the crux of the latest press release issued by Fairholme Capital Management. The firm’s mutual funds and clients own a bulky $2.4 billion of Federal National Mortgage Association (OTCBB:FNMA) and Federal Home Loan Mortgage Corp (OTCBB:FMCC)’s preferred shares.
Bruce Berkowitz Is On Board:
Bruce Bekrowitz’ Fairholme Capital is on board to help with the restructuring of these state owned mortgage giants. The press release emphasizes that privatiziation of these mortgage financiers will be instrumental to the economic well being of the nation and will also lower costs and increase home ownership. The statement also says that there is no alternative to Fannie Mae and Freddie Mac, as both purchase or insure 60 percent of mortgages in America.
Bruce Berkowitz Pushes For Privatization In Press Release:
Bruce Berkowitz is not the only famous shareholder of Federal National Mortgage Association (OTCBB:FNMA) and Federal Home Loan Mortgage Corp (OTCBB:FMCC) who is campaigning for restructuring and privatization. John Paulson, Richard Perry and Claren Road Asset Management (majority stake of Carlyle Group) have forwarded the same agenda. In fact Paulson has been the front-runner of the hedge fund lobby that is pushing for restructuring and privatization, a move that has been given a cold shoulder from the government so far. He has met with Senate Banking Committee and with members of the House of Representatives. Both Democrats and Republicans have called for liquidation of these mortgage giants, so hedge funds have tough competition to beat here.
Fairholme argues that taxpayers’ money which was used to rescue these companies at the time of crisis can be repaid if Fannie and Freddie are restructured. The statement discusses equal treatment of all shareholders and wants dividends to be reinstated, calling it the “American way to do things.”
We look forward to a lot more activity on the lobbying side in the coming months, as hedge funds push for a reincarnation and government insists on burial of the mortgage giants.