William Ackman of Pershing Square Capital Management was on
CNBC's "Squawk Box" Tuesday morning to discuss his fix for Fannie Mae and Freddie Mac. He said both are "far from well capitalized." Ackman has spoken with Treasury and Federal Reserve officials about his plan, which would basically wash out equity holders and help the institutions raise about $86 billion in capital.
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For every dollar of senior unsecured debt, the plan outlines, a holder would receive 90 cents
in new senior unsecured debt and 10 cents in value of new common equity, calling it new Fannie Mae or new Freddie Mac. The government would also offer a three-year stand-by purchase.
"I tried to figure out a way where the senior debtholders can get what they bargained for originally," Ackman said. "I think over time, properly governed, the put will be so far out of the money that the government will not have to buy any equity three years from now," he said.
- Maria WoehrWatch the CNBC video
Troubled Wall Street
Share prices at 11:00 am July 15, 2008 |
| Name |
Open |
Last price |
Change |
Mkt cap |
IndyMac Bancorp
|
- |
0.12 |
-.13 |
12.11M |
Washington Mutual Inc.
|
3.52 |
3.58 |
+.36 |
3.74B |
National City Bancorp
|
3.56 |
3.31 |
-.45 |
2.52B |
Bank of America Corp.
|
19.55 |
19.13 |
-1.02 |
85.18B |
| Morgan Stanley |
31.42 |
30.77 |
-0.98 |
34.07B |
| Citigroup Inc. |
14.99 |
14.55 |
-0.66 |
76.33B |
| Fannie Mae |
8.46 |
7.19 |
-2.51
|
7.04B |
| Freddie Mac |
5.97 |
5.05 |
-2.07 |
3.23B |
| Wachovia Corp. |
8.68 |
8.83 |
-1.00 |
19.13B |
Source: The Deal |
