UPDATE: The Wall Street Journal is reporting:
"...As part of the takeover, Mr. Lockhart said the dividends on Fannie and Freddie's common and preferred stock will be eliminated, but that the common and preferred shares will remain outstanding. Additionally, subordinated debt interest and principal payments will continue to be made...."Original Post
My first thought was that Bill Gross at PIMCO ($500 Bil. of GSE paper) and China ($340 Bil.) are the big winners here.
Next in line are the preferred shareholders (banks) who are having their dividends deferred but can still claim the stock as capital. Finally, the common shareholders are allowed to keep what is in effect a perpetual call option on the business. They won't get their dividend anymore and the value of the option will be in a race between the dilution of their stake by an ongoing series of warrent issuances to the Treasury and the recovery of the GSE's solvency, but they should consider themselves very lucky to have anything.
The big losers are the American taxpayers who may be on the hook for a Trillion dollars and who may see their government lose its AAA credit rating, with the increased borrowing costs that implies.
Oh, and the shorts got screwed.
They can take some solace in the fact that they were right.
And the move from $68.60 to, I'm guessing $2-4 on Monday, should salve some of their anger that the common wasn't wiped out.