CONservatorship- Fannie and Freddie

Only the first three letters speak the truth, the following is from the Telegraph report, linked here: The plan, devised by bankers from Morgan Stanley and agreed to by officials at the US Treasury, will see the pair placed under federal control, a move that could end up costing American taxpayers tens of billions of dollars.

Under the terms of a conservatorship, which is best thought of as a pre-packaged bankruptcy, existing shareholders in both companies will effectively be wiped out, rendering their equity almost worthless, but, importantly, the pair will be able to continue functioning as the government stands behind their debt.

The complex bail-out was presented to executives from Fannie and Freddie on Friday afternoon by senior Treasury officials in Washington D.C.