Thebrainywriters.com stands as the unrivaled pinnacle of homework help services. With a team of expert writers, comprehensive subject coverage, a commitment to academic integrity, punctual delivery, 24/7 support, confidentiality, affordability, and a track record of triumphant testimonials, it has established itself as the go-to platform for students seeking excellence in their academic endeavors. As the educational landscape continues to evolve, Thebrainywriters.com remains an indispensable ally for students worldwide, guiding them towards academic success and a brighter future.
SUMMARY AND YOUR THOUGHTS CENTERED ON THE COMMON AND PREFERRED STOCKS 100 WORDS
Would you buy stock in a company that barred you from sharing in its future earnings? Of course not. Participating in the upside is what stock ownership is all about.
And yet, as of December 2010, holders of Fannie Mae and Freddie Mac common stock were subject to such a restriction by the United States government. They didnâ€™t know it at the time, though, because the policy was not disclosed.
The memo was addressed to Timothy F. Geithner, then the Treasury secretary, from Jeffrey A. Goldstein, then the under secretary for domestic finance. In discussing Fannie and Freddie, the beleaguered government-sponsored enterprises rescued by taxpayers in September 2008, the memo referred to â€œthe administrationâ€™s commitment to ensure existing common equity holders will not have access to any positive earnings from the G.S.E.â€™s in the future.â€
The memo, which was produced in a lawsuit filed by Fannie and Freddie shareholders, was dated Dec. 20, 2010. Securities laws require material information â€” that is, information that might affect an investorâ€™s view of a company â€” to be disclosed. That the government would deny a companyâ€™s shareholders all its profits certainly seems material, but the existence of this policy cannot be found in the financial filings of Fannie Mae. Neither have the Treasuryâ€™s discussions about the future of the two finance giants mentioned the administrationâ€™s commitment to shut common stockholders out of future earnings. Freddie Macâ€™s filings do refer, albeit incompletely, to the administrationâ€™s stance, noting that the Treasury â€œhas indicated that it remains committed to protecting taxpayers and ensuring that our future positive earnings are returned to taxpayers as compensation for their investment.â€ Note that this reference does not say all earnings.
Lewis D. Lowenfels, a securities law expert in New York, found this statement insufficient. â€œIf there is disclosure regarding future Fannie and Freddie earnings and the administration has a commitment that existing Fannie and Freddie common equity holders will never receive any future positive earnings,â€ he said, â€œthis commitment would be material to investors and should be disclosed.â€
When the memo was written, plenty of people held these stocks. Regulatory filings show that 18,000 investors held 1.1 billion shares of Fannie Mae common stock, while just over 2,100 investors held 650 million Freddie Mac shares.
Back in 2010 and 2011, of course, common stockholders of Fannie and Freddie had little hope of making much money. During those days of rampant mortgage defaults and losses, investors were warned about the uncertainty of their companiesâ€™ prospects. Fannie and Freddie shareholders were repeatedly told that the preferred and common stock would have value only if anything remained after taxpayers were fully repaid for the rescue. With the amount of that rescue peaking at $189.5 billion, that was a very big â€œif.â€ On the day the Treasury memo was written, the price of Fannie Mae shares closed at 34 cents.
But the companies staged a turnaround; in mid-2012, they began earning billions. With interest rates low and banks not lending, Fannie and Freddie became the only mortgage game in town. By Sept. 30 of last year, the companies had returned $185 billion to the Treasury.
Failing to disclose the administrationâ€™s hard line on the companiesâ€™ shareholders is disturbing for another reason. In bailing out Fannie and Freddie, the Treasury received warrants â€” optionlike securities that rise in value when the shares underlying them do. When investors, hoping for a housing recovery, flocked to the shares and pushed them higher, the value of the warrants increased. Fannieâ€™s common stock now trades at $3.06 a share.
Academic integrity is non-negotiable, and Thebrainywriters.com takes this principle to heart. Recognizing the significance of originality, the website guarantees that every assignment and paper is crafted from scratch. A strict anti-plagiarism policy and state-of-the-art plagiarism detection tools ensure that students receive unique and authentic content, giving them the confidence to submit their work without any concern. Time is of the essence in the academic realm, and Thebrainywriters.com understands the importance of meeting deadlines. Their unwavering commitment to punctuality ensures that students receive their completed assignments well before the submission date. This punctuality not only alleviates the stress of last-minute rushes but also allows students ample time for review and revision, promoting a deeper understanding of the subject matter. Recognizing that academic emergencies can arise at any hour, Thebrainywriters.com offers round-the-clock customer support. Students can rest assured that their queries and concerns will receive swift and attentive responses, regardless of the time zone they reside in. This dedication to customer care builds trust and fosters a supportive relationship between the website and its users.