Multiple sources are reporting that the Treasury will take over the GSEs. However, it is also being reported that common shareholders will have the value of there shares diluted, but not wiped out and that preferred holders and ALL bond holders will be protected by the government. Hear that fear-mongers? Preferreds will survive as will ALL bondholders. Although I may have been incorrect in my belief that a takeover was unlikely (Paulson caved to pressure), I was very correct in my belief that preferred holders and bond investors would come out of this intact. Look for GSE preferreds and bonds to rally sharply Monday morning.
P.S. CNBC's Fast Money had a story which stated that shareholders would be wiped out. The story has since been pulled, but broken link remains as evidence.
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