Citigroup: No Nationalization

Analyst thinks Fannie and Freddie are fine and has them at a “buy.”


Take this piece of Citigroup analysis for what it is worth:

We do not believe there is any real risk of a government takeover of FNM and FRE any time soon. Treasury Secretary Paulson's statement on Friday (7/11) that the administration supports "Fannie Mae and Freddie Mac in their current form" confirms that "nationalization" is not a desirable option. We think the administration and lawmakers recognize that the current GSE structure, as shareholder-owned companies, works well.

Me: Look, if the government is willing to take an equity stake, then that in and of itself tells you that the basic form of the companies is subject to change by government fiat. Just another step toward nationalization.


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