The fools on capital hill have tentatively agreed to a rescue plan for troubled financial institutions (and by extension the economy). Taxpayers may also end up winners in the deal, unless you are a taxpayer who make their mortgage payments or invested in Freddie and Fannie preferreds (at par, not a discount) with the encouragement of Ofheo (wh stated repeatedly that the GSEs were healthy). According to the plan, homeowners facing foreclosure will receive a tax holiday. Too bad if you did not purchase too much home or chose financing vehicles wisely.
Banks which invested in GSE preferreds will also received tax benefits to cushion the blow from the Treasury's wiping out (hopefully temporarily) of GSE preferred shares. However, if an individual purchased Freddie and Fannie shares for income (one does not usually speculate via preferred shares), he or she is out of luck.
Once again, responsible citizens who exhibited proper financial restraint and wisdom get hosed by the government. The song remains the same.
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